Forth et al v. Walgreen Co. et al
MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 3/9/18.Mailed notice(ca, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
DOROTHY FORTH, TROY TERMINE,
CYNTHIA RUSSO, INTERNATIONAL
BROTHERHOOD OF ELECTRICAL
WORKERS LOCAL 38 HEALTH AND
WELFARE FUND, LISA BULLARD,
AND RICARDO GONZALES, on
behalf of themselves and all others
Judge John Z. Lee
MEMORANDUM OPINION AND ORDER
Plaintiffs Dorothy Forth, Troy Termine, Cynthia Russo, Lisa Bullard, and
Ricardo Gonzales (“Consumer Plaintiffs”), and Plaintiff International Brotherhood of
Electrical Workers Local 38 Health and Welfare Fund (“IBEW”) (collectively,
“Plaintiffs”), filed this putative class action against Defendant Walgreen Co.
(“Walgreens”). Plaintiffs claim that Walgreens, the largest retail pharmacy in the
United States, engaged in fraudulent pricing practices through its Prescription
Savings Club, a discount generic drug program offered to customers paying without
According to Plaintiffs, these fraudulent pricing practices sought to
artificially inflate the “usual and customary prices” reported to health-insurance
companies and related third-party payors and resulted in Plaintiffs overpaying for
Plaintiffs plead claims of fraud, negligent misrepresentation, and
unjust enrichment, as well as violations of state consumer-protection statutes in
nineteen states. 1
They also seek declaratory and injunctive relief under the
Declaratory Judgment Act, 28 U.S.C. § 2201, et seq.
Walgreens moves to dismiss all but one claim 2 in the First Amended
Complaint for failure to state a claim, failure to plead the fraud claims with
particularity, and lack of standing to pursue injunctive relief.
For the reasons
provided below, the Court grants in part and denies in part the motion to dismiss.
Factual Background 3
Walgreens is the largest retail pharmacy in the United States, with over 8,000
retail pharmacies in all fifty states.
Am. Compl. ¶ 7, ECF No. 46.
pharmacy operations are directed from its Deerfield, Illinois, headquarters, where its
key executives are located. Id. ¶¶ 36, 39, 41.
Consumer Plaintiffs are individuals, who purchased generic versions of
prescription medications at Walgreens either through private health insurance plans
Plaintiffs plead violations of state consumer protection statutes in the following
states: Arizona, California, Colorado, Florida, Georgia, Illinois, Louisiana, Massachusetts,
Minnesota, Missouri, Nevada, New Mexico, New York, North Carolina, Ohio, South Carolina,
Texas, and Wisconsin. See Am. Compl. Counts IV–XXVIII. The Amended Complaint also
includes a claim for violation of the Kansas Consumer Protection Act (Count XIV), but
Plaintiffs have since withdrawn this claim. See Pls.’ Resp. Mot. Dismiss at 15 n.11, ECF No.
While Walgreens purports to move to dismiss the entire complaint, see Def.’s Mem.
Supp. Mot. Dismiss at 2, it does not move to dismiss the unjust enrichment claim (Count III).
The following facts are taken from Plaintiffs’ Amended Complaint and are accepted as
true on review of the motion to dismiss. See Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th
Cir. 2008) (stating that, at the motion-to-dismiss stage, the court “accept[s] as true all wellpleaded facts alleged”).
or through federal health insurance such as Medicare, in the states of Texas,
Louisiana, Florida, Massachusetts, New Mexico, Wisconsin, and South Carolina. Id.
¶¶ 14, 17, 20, 23, 26.
IBEW is an employee-benefit plan and a non-profit trust, administered by a
board of trustees and established through collective bargaining by employers and
labor unions. Id. ¶¶ 29, 30. It provides healthcare benefits to participants employed
under various collective-bargaining agreements and their dependents.
Id. ¶ 30.
While IBEW is based in Ohio, its beneficiaries are located in Arizona, California,
Colorado, Florida, Georgia, Iowa, Illinois, Kansas, Louisiana, Minnesota, Missouri,
Nevada, North Carolina, Ohio, South Carolina, Texas, and Wisconsin. Id.
Since 2007, Walgreens has operated a discount generic-drug program called
the “Prescription Savings Club” (“PSC”). Id. ¶¶ 4, 8. The PSC allows customers that
pay directly for prescriptions, whether by cash, check, or credit, to purchase more
than 500 widely prescribed generic drugs for $5, $10, and $15 for 30-day
prescriptions, and $10, $20, and $30 for 90-day prescriptions, depending on the
drug’s tier classification. Id. ¶ 8. To take advantage of the PSC’s prices, customers
must pay a yearly membership fee of $20 per individual or $30 per family. Am.
Compl. Ex. A, Value-Priced Medication List, ECF No. 46-1. All pharmacy patrons
other than Medicare and Medicaid beneficiaries are eligible to participate in the PSC,
and a majority of Walgreens’ direct-pay 4 customers pay the PSC prices. Am. Compl.
¶¶ 10, 11.
The complaint alleges that, at the same time it offered low prices through the
PSC to direct-pay customers, Walgreens charged higher prices to customers
purchasing those same drugs through private insurance or through Medicare or
Id. ¶ 12.
According to Plaintiffs, pharmacies cannot charge such
consumers—or report to insurance companies or other third-party providers (such as
Medicare and Medicaid)—a higher price for prescription drugs than what is known
as the “usual and customary” (“U&C”) price. Id. ¶ 5. Plaintiffs allege that the U&C
price is known, throughout the pharmaceutical industry, as the price that the
pharmacy charges the direct-pay public. Id.; see also id. ¶ 53 (providing examples of
industry sources defining the U&C price). Plaintiffs contend that Walgreens’ PSC
prices qualified as the pharmacy’s U&C prices, and that by reporting higher-thanPSC prices as its U&C prices on claims for reimbursement submitted to insurance
companies and other third-party providers, Walgreens operated an undisclosed, dualpricing scheme for generic PSC-listed drugs. Id. ¶ 12.
Plaintiffs allege significant damages due to Walgreens’ dual-pricing scheme.
Id. ¶ 13.
Because the reported U&C price is used to calculate the amount of
copayments, coinsurance or deductible amounts, Plaintiffs claim that Walgreens
overcharged Plaintiffs and other consumers when it collected from them inflated
The Court uses “direct-pay” to indicate those customers, who pay for prescriptions
without using health insurance, Medicare, or Medicaid.
copayments, coinsurance and deductibles.
Id. ¶ 12. For example, Plaintiff Forth
alleges that Walgreens overcharged her by $285 for fifteen prescription purchases of
PSC-listed generic drugs. Id. ¶ 14. These purchases included six prescriptions for
which she was charged more than $40, but for which the PSC-listed price was $15.
Id. Plaintiff Forth and the other Consumer Plaintiffs claim that they were under the
impression that, because they had health insurance with prescription benefits
coverage, they would not be paying more than direct-pay customers for their
prescriptions. Id. ¶¶ 15, 18, 21, 24, 27. All Consumer Plaintiffs anticipate filling
future prescriptions for PSC-covered drugs at a Walgreens pharmacy to maintain
continuity of medical care. Id. ¶¶ 16. 19, 22, 25, 28. Finally, IBEW asserts that
because it reimburses or pays for its beneficiaries’ purchases of prescription drugs, it
was harmed by paying more for PSC-listed generic drugs than it would have if
Walgreens had accurately reported its U&C prices. Id. ¶ 30.
To survive a motion to dismiss under Rule 12(b)(6), a complaint must “state a
claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Additionally,
when considering motions to dismiss, the Court accepts “all well-pleaded factual
allegations as true and view[s] them in the light most favorable to the plaintiff.”
Lavalais v. Vill. of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013),
At the same
time, “allegations in the form of legal conclusions are insufficient to survive a Rule
12(b)(6) motion.” McReynolds v. Merrill Lynch & Co., Inc., 694 F.3d 873, 885 (7th
Cir. 2012) (citing Iqbal, 556 U.S. at 678).
As such, “[t]hreadbare recitals of the
elements of the cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678.
Moreover, allegations of fraud must be pleaded in conformance with federal
pleading standards specified in Rule 9(b). Borsellino v. Goldman Sachs Group, Inc.,
477 F.3d 502, 507 (7th Cir. 2007).
Under Rule 9(b), in “averments of fraud or
mistake, the circumstances constituting fraud or mistake shall be stated with
particularity.” Id. The “circumstances constituting fraud” include the identity of the
person who committed the fraud, the time, place, and content of the fraud, and the
method by which the fraud was communicated to the plaintiff. See Vicom, Inc. v.
Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir. 1994). This is also known as
the “who, what, when, where and how” standard. DiLeo v. Ernst & Young, 901 F.2d
624, 627 (7th Cir. 1990). This requirement ensures that defendants have fair notice
of plaintiffs’ claims and grounds, providing defendants an opportunity to frame their
answers and defenses. Reshal Assocs., Inc. v. Long Grove Trading Co., 754 F. Supp.
1226, 1230 (N.D. Ill. 1990).
A motion to dismiss pursuant to Rule 12(b)(1) tests the jurisdictional
sufficiency of the complaint. “When ruling on a motion to dismiss for lack of subject
matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), the district court
must accept as true all well-pleaded factual allegations, and draw reasonable
inferences in favor of the plaintiff.” Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir.
1995). But “[t]he district court may properly look beyond the jurisdictional
allegations of the complaint and view whatever evidence has been submitted on the
issue to determine whether in fact subject matter jurisdiction exists.”
Leasing Co. v. F.D.I.C., 999 F.2d 188, 191 (7th Cir. 1993) (quoting Grafon Corp. v.
Hausermann, 602 F.2d 781, 783 (7th Cir. 1979)). “[I]f the complaint is formally
sufficient but the contention is that there is in fact no subject matter jurisdiction, the
movant may use affidavits and other material to support the motion.”
Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir. 2003), overruled on
other grounds by Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 848 (7th Cir. 2012).
“The burden of proof on a 12(b)(1) issue is on the party asserting jurisdiction.” Id.
In the Amended Complaint, Plaintiffs assert claims of fraud (Count I),
negligent misrepresentation (Count II), unjust enrichment (Count III), and violation
of the Illinois Consumer Fraud and Deceptive Business Practices Act (Count IV), and
request injunctive and declaratory relief (Count XXIX). Plaintiffs Gonzales, Bullard,
and Forth, each assert claims for, respectively, violations of the New Mexico Unfair
Practices Act (Count XXII), the New York GBL § 349 (Count XXIII), and the Texas
Deceptive Trade Practices Act (Count XXVII).
IBEW asserts claims for violations of the following state statutes: 5 the Arizona
Consumer Fraud Act (Count V); the California Unfair Competition Law (Counts VI–
VIII); the Colorado Consumer Protection Act (Count X); the Florida Deceptive Trade
Practices Act (Count XI); the Georgia Uniform Deceptive Trade Practices Act and the
Georgia Fair Business Practices Act (Counts XII–XVIII); the Louisiana Unfair Trade
Practices and Protection Law (Count XV); the Massachusetts Consumer Protection
Act (Count XVI); the Minnesota Prevention of Consumer Fraud Act, the Minnesota
Unlawful Trade Practices Act, and the Minnesota Deceptive Trade Practices Act
(Counts XVII–XIX); the Missouri Merchandising Practices Act (Count XX); the
Nevada Deceptive Trade Practices Act (Count XXI); the North Carolina Unfair and
Deceptive Trade Practices Act (Count XXIV); the Ohio Deceptive Trade Practices Act
(Count XXV); the South Carolina Unfair Trade Practices Act (Count XXVI); the
Texas Deceptive Trade Practices Act (Count XXVII); and the Wisconsin Deceptive
Trade Practices Act (Count XXVIII). 6
Walgreens moves to dismiss all claims but the unjust enrichment claim. For
the following reasons, the Court grants Defendants’ motions to dismiss the claims for
negligent misrepresentation (Count II) and violation of the Missouri Merchandising
These plaintiffs also join IBEW on the following counts: Russo (Count XI); Termine
(Count XV); Bullard (Count XVI); and Gonzales (Count XXVI and XXVIII).
IBEW also asserts claims in the Amended Complaint for violations under the
California Legal Remedies Act (Count IX) and the Kansas Consumer Fraud Act (Count XIV),
but it has since withdrawn those claims. Pl.’s Resp. Mot. Dismiss at 15 n.11.
Practices Act (Count XX). The Court denies Walgreens’ motion to dismiss in all other
Illinois Fraud and Negligent Misrepresentation Claims
To state a claim for fraud in Illinois, a plaintiff must plead: “(1) a false
statement of material fact; (2) defendant’s knowledge that the statement was false;
(3) defendant’s intent that the statement induce the plaintiff to act; (4) plaintiff’s
reliance upon the truth of the statement; and (5) plaintiff’s damages resulting from
reliance on the statement.” Connick v. Suzuki Motor Co., 675 N.E.2d 584, 591 (Ill.
1996). The elements of negligent misrepresentation in Illinois are similar: “(1) a false
statement of material fact, (2) carelessness or negligence in ascertaining the truth of
the statement by defendant, (3) an intention to induce the other party to act, (4)
action by the other party in reliance on the truth of the statements, (5) damage to the
other party resulting from such reliance, and (6) a duty owed by defendant to
plaintiff to communicate accurate information.” Rosenstein v. Standard & Poor’s
Corp., 636 N.E.2d 665, 667 (Ill. 1993). The two causes of action differ in two ways:
first, fraud requires a defendant’s knowledge that the statement was false, whereas
negligent misrepresentation requires only the defendant’s carelessness or negligence
as to the truth of the statement; and second, negligent misrepresentation requires a
duty on the part of the defendant to communicate accurate information to the
Walgreens asserts that the fraud and negligent misrepresentation claims in
the Amended Complaint should be dismissed because Plaintiffs do not plausibly
allege (1) any false statements of fact; (2) Plaintiffs’ reasonable reliance on any such
statements; or (3) any legal duty Walgreens had to Plaintiffs, as required for a claim
of negligent misrepresentation.
Walgreens also contends that Plaintiffs failed to
plead the fraud claim with the particularity required under Rule 9(b).
For the following reasons, the Court denies Walgreens’ motion to dismiss the
fraud claim and grants the motion to dismiss the negligent representation claim.
False Statement of Material Fact
According to Plaintiffs, Walgreens made false statements every time it
reported the higher-than-PSC prices to insurers as U&C prices, instead of accurately
reporting its PSC prices as U&C prices. Am. Compl. ¶¶ 75, 76. Walgreens moves for
dismissal of the fraud and negligent misrepresentation claims for failure to state a
claim on the basis that Plaintiffs have not plausibly alleged that reporting higherthan-PSC prices to insurers constituted a false statement. Walgreens makes four
arguments for why such an allegation is implausible: (1) that the definition of U&C is
“often” defined by contracts between insurance providers and Walgreens, and that
without mentioning such contracts, Plaintiffs have failed to allege that Walgreens
was required to report PSC prices as its U&C prices, Def.’s Mem. Supp. Mot. Dismiss
at 8, ECF No. 54; (2) that PSC prices could not plausibly be alleged to be U&C prices
because direct-pay customers need to opt-in to the PSC and pay a yearly membership
fee to access those prices, id. at 6; (3) that information about the PSC was widely
available, id. at 6, 7, 9; and (4) that Plaintiffs have not pleaded that the false
statements were made to them directly, id. at 9. None of these theories support
dismissal of the fraud claim at this stage.
First, Walgreens contends that Plaintiffs fail to plead any “factual allegations
to support [their] bald legal conclusion that the definitions of the term ‘U&C pricing’
set out in those contracts required Walgreens to report the prices offered to PSC
members as its U&C prices.” Id. at 8. But this is not the basis of Plaintiffs’ claim.
Rather, Plaintiffs’ allegations (which must be taken as true for the purposes of this
motion) claim that U&C prices are known throughout the pharmaceutical industry
as “the price the pharmacy charges the direct-pay public,” Am. Compl. ¶ 5, and they
provide examples of industry sources defining U&C prices as such, id. ¶ 53. 7
Walgreens’ next argument is that, because cash-paying customers need to opt
in to the PSC and pay a yearly membership fee to access PSC prices, such prices
cannot qualify as U&C prices.
Def.’s Mem. Supp. Mot. Dismiss at 6.
Walgreens does not develop this argument further, Walgreens appears to imply that
prices that can only be accessed with an annual membership fee cannot qualify as
prices “charged to the cash-paying public.” But the Seventh Circuit recently rejected
a substantially similar argument, where a large retailer argued that pharmacy prices
offered through a membership program with an annual fee of $10 did not qualify as
“usual and customary” prices for the purposes of reporting prices to Medicare.
Of course, to the extent that a particular third-party payor’s agreement with
Walgreens defined U&C prices in a particularized way and Walgreens’ prices for that
particular payer were consistent with that definition, this would undercut Plaintiffs’ claim.
But such factual issues cannot be resolved without further discovery.
United States ex rel. Garbe v. Kmart Corp., 824 F.3d 632, 643–44 (7th Cir. 2016). The
Seventh Circuit explained that because “Kmart offered the terms of its ‘discount
programs’ to the general public and made them the lowest prices for which its drugs
were widely and consistently available, the Kmart ‘discount’ prices at issue
represented the ‘usual and customary’ charges for the drugs.” Id. at 645.
Here, Plaintiffs have plausibly alleged that the PSC prices qualified as U&C
prices and that Walgreens made false statements of fact every time it reported
higher-than-PSC prices as U&C prices to insurance providers. PSC membership was
offered to the general public at a nominal fee of $20 per year. 8 See Value-Priced
Medication List at 5. Plaintiffs have also pleaded that the majority of Walgreens’
cash-paying customers pay no more than the PSC prices, Am. Compl. ¶ 11, that
Walgreens’ reported U&C prices are “up to 5 times its own PSC prices,” id. ¶ 82, and
that while Walgreens’ PSC prices accord with the U&C prices charged by
competitors, Walgreens’ reported U&C prices are “up to 11 times the U&C prices
reported by some of its most significant competitors,” id. Other than attempting to
distinguish Garbe as occurring in the Medicaid regulatory context, 9 see Def.’s Rep.
The price for PCS membership was frequently less than the price difference between
PSC prices and the prices charged to the Consumer Plaintiffs. For example, on 1/31/13 and
2/23/13, Plaintiff Forth paid $40 for a $15 PSC drug; on 7/22/14 and 9/2/14, she paid $59.89
for a $15 PSC drug; on 4/7/15, she paid $45.08 for a $15 PSC drug; on 6/6/15, she paid $40.38
for a $5 PSC drug; and on 7/10/15, she paid $45.77 for a $5 PSC drug. Am. Compl. ¶ 14.
Although plaintiffs in Garbe relied upon the definition of “usual and customary” found
in Medicare regulations, see 42 C.F.R. § 423.100, Plaintiffs here rely upon the industry
definition of what constitutes “usual and customary” prices. See Am. Compl. ¶ 5. Whether
such a standard exists (and what it is) is something that Plaintiffs must prove at trial, but
for the purpose of assessing the viability of Plaintiffs’ fraud claim, the Court must assume
that such a standard exists as Plaintiffs have alleged.
Mot. Dismiss at 2, ECF No. 66, Walgreens does not respond to Plaintiffs’ line of
Walgreens’ final two arguments are similarly unconvincing.
argues, in passing and without any legal support, that Plaintiffs cannot plausibly
plead a misstatement occurred because they do not allege the statement was made to
them directly. Def.’s Mem. Supp. Mot. Dismiss at 9.
But Plaintiffs assert that
Walgreens communicated misstatements to the Consumer Plaintiffs each time it
charged them cost-sharing amounts based on higher-than-PSC prices. Pls.’ Resp.
Mot. Dismiss at 7, ECF No. 62. And Walgreens does not provide any basis for its
argument that the public availability of information about the PSC program
somehow demonstrates that Plaintiffs cannot plead a plausible misrepresentation of
fact. See Def.’s Rep. Supp. Mot. Dismiss at 2–3. In any event, Plaintiffs have not
alleged that Walgreens concealed its PSC program. Instead, Plaintiffs contend that
Walgreens “deceived Plaintiffs by reporting U&C prices significantly above the prices
available to members of the [PSC] program, and then charged Plaintiffs inflated
copays as a result of their deceitful practice.” Pls.’ Resp. Mot. Dismiss at 8 (citing
Corcoran v. CVS Health Corp, 169 F. Supp. 3d 970, 987 (N.D. Cal. 2016)).
For the above reasons, Walgreens’ motion to dismiss the fraud and negligent
misrepresentation claims on the basis of failure to plead a misstatement of fact is
misrepresentation claims for failure to state a claim, on the grounds that Plaintiffs
fail to plead reasonable reliance.
According to Walgreens, reliance on any misrepresentations would have been
unreasonable, because information about the prices was publicly available.
Walgreens appears to imply that, because the Consumer Plaintiffs 10 could have
researched the PSC and compared prices, it was unreasonable for them to purchase
their drugs through insurance and hence rely on Walgreens’ misreporting of U&C
Def.’s Mem. Supp. Mot. Dismiss at 9–10.
But resolution of such a fact-
intensive inquiry is not appropriate at the motion-to-dismiss stage. See Glazer v.
Abercrombie & Kent, Inc., No. 07C2284, 2007 WL 3120055, at *2 (N.D. Ill. Oct. 23,
2007) (“Based on the specific facts of this case, the issue of whether plaintiffs’
reliance on certain documents and statements was reasonable is not appropriate for
resolution at the Rule 12(b)(6) motion to dismiss stage of the proceedings.” (citing
Marks v. CDW Computer Centers, Inc., 122 F.3d 363, 370 (7th Cir. 1997))); Mfrs. Life
Ins. Co. v. 1 Animation Network, Inc., No. 04 C 8105, 2005 WL 1950666, at *2 (N.D.
Ill. Aug. 10, 2005) (“The court cannot determine at the pleadings stage whether there
Walgreens never explicitly states that they are focused on the Consumer Plaintiffs,
but none of their arguments account for its interactions with IBEW, a third-party payor. As
such, they have waived any argument that IBEW failed to state a claim due to lack of
reliance for the purpose of this motion. See Godbole v. Ries, 2017 WL 219506, at *2 (N.D. Ill.
Jan. 19, 2017) (“The Court is not required to construct arguments for [parties].” (citing Pine
Top Receivables of Ill., LLC v. Banco de Seguros del Estado, 771 F.3d 980, 987 (7th Cir.
was reasonable reliance in the absence of any evidence.”). In any event, Plaintiffs
have plausibly pleaded that because they paid premiums for health insurance with
prescription benefits coverage, they believed that they would pay “at least the same
as and not more than a direct-pay customer” for prescriptions filled at Walgreens. 11
Am. Compl. ¶¶ 15, 18, 21, 24, 27.
Walgreens’ motion to dismiss the fraud and
negligent misrepresentation claims on the basis of failure to plead reasonable
reliance is therefore denied.
To state a claim for negligent misrepresentation, as distinct from fraud,
“plaintiff’s complaint must first allege facts establishing a duty owed by the
defendant to communicate accurate information.” Brogan v. Mitchell Int’l, Inc., 692
N.E.2d 276, 278 (Ill. 1998). Walgreens argues that Plaintiffs have not sufficiently
pleaded that Walgreens owes Plaintiffs a duty to communicate accurate information.
Def.’s Mem. Supp. Mot. Dismiss at 11. The Court agrees.
For their part, Plaintiffs contend that Walgreens “owes a duty to provide
accurate information regarding the prices of generic prescription drugs” due to its
role “[a]s a pharmacy providing prescription medication to consumers.” Am. Compl.
¶ 102. Plaintiffs further identify a duty in the “Code of Ethics for Pharmacists,”
Walgreens further argues that Plaintiffs’ statements that they plan on filling future
prescriptions for PSC Generics at a Walgreens pharmacy to maintain continuity of medical
care “exclude[ ] any notion that the Plaintiffs could have reasonably relied on any alleged
misrepresentation in the first place.” Def.’s Mem. Supp. Mot. Dismiss at 9–10 (citing Am.
Compl. ¶¶ 16, 19, 22, 25, 28). But Walgreens provides no explanation of why Plaintiffs’ plans
for their future medical care are relevant to the reasonableness of their reliance on
Walgreens’ past misstatements.
which Plaintiff claims “mandates Walgreens’ pharmacies and the pharmacists within
the pharmacies to tell the truth and to assist individuals in making the best use of
medications.” Id. But in the context of a negligent misrepresentation claim, the
Illinois Supreme Court only recognizes a duty to communicate accurate information
where necessary “to avoid negligently conveying false information that results in
physical injury to a person or harm to property,” or “to avoid negligently conveying
false information where one is in the business of supplying information for the
guidance of others in their business transactions.”
Brogan, 692 N.E.2d at 278
(internal citation omitted). The former does not apply, and Plaintiffs do not plausibly
allege that Walgreens is in the business of supplying information for the guidance of
others in their business transactions.
See Fireman’s Fund Insur. Co. v. SEC
Donohue, Inc., 679 N.E.2d 1197, 1201 (Ill. 1997) (holding that one is not in the
business of supplying information for the guidance of others in their business
transactions if “the information that is supplied is merely ancillary to the sale or in
connection with the sale of merchandise or other matter”). Accordingly, Walgreen’s
motion to dismiss the negligent representation claim on this basis is granted.
Rule 9(b) Heightened Pleading Standard
According to Walgreens, the fraud and negligent misrepresentation claims
must also be dismissed under Rule 9(b) for failing to sufficiently address the “who,
what, when, where and how” standard.
Def.’s Mem. Supp. Mot. Dismiss at 4–5
(citing Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631
F.3d 436, 441–42 (7th Cir. 2011)).
Walgreens argues that Plaintiffs have impermissibly relied on “information
and belief” as the basis for their factual allegations. 12 Def.’s Mem. Supp. Mot.
Dismiss at 5. But Plaintiffs sufficiently allege the “who”: Walgreens. Id. ¶¶ 7, 8, 12,
13. They also provide details of the “what” and “how” of the fraud: they allege that
Walgreens was aware of the requirement that it report the price charged to the
direct-pay public as the U&C price when adjudicating claims, id. ¶¶ 54–59, but that
Walgreens reported higher non-PSC prices as U&C prices when adjudicating claims,
with the goal of charging insured customers artificially inflated prices, id. ¶¶ 64–66,
111–113. Plaintiffs also allege that the PSC was formed in 2007 and that Walgreens
has been fraudulently reporting higher non-PSC prices as U&C prices to insurers
since then. Id. ¶¶ 8, 12, 13. Plaintiffs also identify the states where each plaintiff is
domiciled and allegedly made purchases of PSC-listed generics. See, e.g., id. ¶¶ 14,
23. Because the well-pleaded complaint describes the “who, what, when, where and
how” of the alleged fraud in detail, the Court denies the motion to dismiss the claims
pursuant to Rule 9(b).
Walgreens is correct that Plaintiffs assert “information and belief” as the basis for
some of their allegations. See, e.g., Am. Compl. ¶ 11 (“Upon information and belief, the
majority of Walgreens’ direct-pay customers pay no more than the PSC Prices.”). However,
the majority of the factual allegations that are asserted “upon information and belief” are
assertions about the scale and the purpose of the alleged fraud, not about the basic “who,
what, when, where and how.” See, e.g., id. ¶ 51 (“Upon information and belief, Walgreens
uniformly administers its fraudulent U&C pricing scheme such that it uses the same inflated
U&C price for a particular PSC Generic that it reports and charges to Plaintiffs and the
Class.”); id. ¶ 65 (“Upon information and belief, Walgreens implemented the PSC program as
a scheme to maximize reimbursements from third-party payors and payments from
consumers through fraudulently inflated U&C prices, while still remaining competitive for
direct-pay prescription drug customers.”).
In summary, the Court denies the motion to dismiss the fraud claim, finding
that Plaintiffs met the Rule 9(b) pleading standard, as well as plausibly alleged that
Walgreens made false statements of fact and that Plaintiffs reasonably relied on
those misstatements. The Court grants Walgreens’ motion to dismiss the negligent
representation claim on the basis that Plaintiffs cannot plead that Walgreens had a
legal duty of the type necessary to sustain a negligent misrepresentation claim.
State Consumer Law Claims
Walgreens argues that Plaintiffs’ claims for violations of state consumer laws
(Counts IV–XXVIII) should be dismissed because Plaintiffs do not plausibly allege
deceit, fraud, or misrepresentation, which Walgreens asserts is an element of all the
state consumer law claims alleged by Plaintiffs. Def.’s Mem. Supp. Mot. Dismiss at
13. It next contends that the state consumer-protection-law claims that are brought
solely by IBEW (Counts V–X, XII–XIV, XVII–XXI, XXIV, XXV), as well as Count IV
(brought by all Plaintiffs, including IBEW) should be dismissed because IBEW
cannot sue on behalf of its beneficiaries. Id. at 8 n.7. Walgreens further argues that
IBEW lacks a right of action under some of the statutes because IBEW does not
qualify as a “consumer” under those statutes’ definitions (Counts IV, XIII, and XX),
id. at 14, because IBEW cannot plead that Walgreens “displayed” its prices (Count
XVIII), id. at 16–17, and because IBEW cannot plead that it was in competition with
Walgreens (Count XXV), id. at 18.
Walgreens also moves to dismiss claims under three other statutes (Counts
XIII, XV, and XXVI) because those statutes prohibit class actions. Id. at 15–16. It
further seeks to dismiss a claim by Plaintiff Bullard for violation of New York’s
General Business Law § 349 (Count XXIII), id. at 17–18, arguing that she cannot
plausibly plead causation, and a claim by Plaintiff Forth for violation of the Texas
Deceptive Trade Practices Act (Count XXVIII), contending that Plaintiff Forth has
not plausibly alleged an unconscionable action, id. at 18–19.
For the following reasons, the Court grants Walgreens’ motions to dismiss the
claims for violation of the Missouri Merchandising Practices Act (Count XX) and
denies Walgreens’ motions to dismiss all other claims for violations of state consumer
Failure to Allege Deceit, Fraud, or Misrepresentation
Walgreens seeks to dismiss all of Plaintiffs’ claims for violations of state
consumer-protection laws for failure state a claim under Rule 12(b)(6). Id. at 13.
Walgreens argues, without any supporting citations, that each of the state consumer
protection laws of which Plaintiffs allege violations “require[ ] the defendant to have
engaged in some form of deceit, fraud, or misrepresentation,” and because Plaintiffs
have not so alleged, those claims must be dismissed. Id. Even if Walgreens had not
waived this argument by failing to provide any supporting reasoning or authority, see
M.G. Skinner & Assocs. Ins. Agency, Inc. v. Norman–Spencer Agency, Inc., 845 F.3d
313, 321 (7th Cir. 2017), the Court has already denied Walgreens’ motions to dismiss
Plaintiffs’ fraud claim on this basis.
IBEW’s Ability to Assert Claims of Beneficiaries
Walgreens also moves to dismiss the state consumer protection statute claims
that are brought by IBEW in one fell swoop, arguing that “it is nonsensical to believe
that IBEW can represent ‘all TPPs [third-party payors] nationwide.’” Def.’s Mem.
Supp. Mot. Dismiss at 8.
But the ability of IBEW to adequately represent the
interests of various putative class members is an inquiry better left to the class
certification stage, rather than the pleading stage. See Fed. R. Civ. P. 23(a); Retired
Chi. Police Ass’n v. City of Chi., 7 F.3d 584, 599–600 (whether an association is an
adequate class representative under Rule 23 is distinct from the question of
standing). 13 This is also true with respect to Walgreens’ cursory argument that
IBEW cannot represent similarly situated third-party payors. See Def.’s Mem. Supp.
Mot. Dismiss at 8–9.
IBEW as a “Consumer”
Walgreens moves to dismiss claims brought by IBEW for violations of three 14
state consumer protection statutes: the Illinois Consumer Fraud and Deceptive
Business Practices Act (Count IV), the Georgia Fair Business Practices Act (Count
XIII), and the Missouri Merchandising Practices Act (Count XX). Walgreens argues
In a footnote, Walgreens appears to challenge IBEW’s standing to pursue the state
consumer protection statutory claims on behalf of its members. Def.’s Mem. Supp. Mot.
Dismiss at 8 n.7. But this argument is half-baked. And, as we shall see, the answer to this
question depends on whether IBEW falls within the language of the particular statute at
Walgreens also moves to dismiss Plaintiffs’ claims for violations of the California
Consumer Legal Remedies Act (Count IV) and the Kansas Consumer Fraud Act (Count
XXIV) on this basis, but Plaintiffs have since withdrawn these claims. Pl.’s Resp. Mot.
Dismiss at 15 n.11.
that, because IBEW is not a “consumer” under those statutes, it lacks a private right
of action to sue. Def.’s Mem. Supp. Mot. Dismiss at 14. Walgreens is correct as to
the Missouri Merchandising Practices Act, but incorrect as to the Illinois Consumer
Fraud and Deceptive Business Practices Act and the Georgia Fair Business Practices
Illinois Consumer Fraud and Deceptive Business
Walgreens contends that the Illinois Consumer Fraud and Deceptive Business
Practices Act (ICFA) limits private consumer-fraud claims to individual “consumers,”
defined by statute as “any person who purchases or contracts for the purchase of
merchandise not for resale in the ordinary course of his trade or business but for his
use or that of a member of his household.” Def.’s Mem. Supp. Mot. Dismiss at 15
(citing 815 Ill. Comp. Stat. Ann. 505/1(e)). According to Walgreens, IBEW does not
qualify as a “consumer” and, therefore, cannot sue under the ICFA. 15 Id.
But Walgreens ignores the fact that “person” is defined to include business
entities, associations, and trusts.
815 Ill. Comp. Stat. Ann. 505/1.
Illinois law, a business entity can sue for violations under the act if it can show “a
personal injury caused by the allegedly fraudulent or deceptive acts,” Skyline Int’l
Dev. v. Citibank, F.S.B., 706 N.E.2d 942, 946 (Ill. App. Ct. 1998), or if it is “able to
allege that the challenged conduct ‘involves trade practices addressed to the market
The Consumer Plaintiffs join IBEW in alleging a violation of the ICFA, but Walgreens
has moves to dismiss only the claim as asserted by IBEW. See Def.’s Mem. Supp. Mot.
Dismiss at 14–15.
generally or otherwise implicates consumer protection concerns.’” ATC Healthcare
Servs., Inc. v. RCM Techs., Inc., 192 F. Supp. 3d 943, 955 (N.D. Ill. 2016) (citing
Indus. Specialty Chem., Inc. v. Cummins Engine Co., Inc., 902 F. Supp. 805, 811
(N.D. Ill. 1995)). Here, the complaint adequately alleges that IBEW suffered injury
as a result of the purported practices.
Furthermore, the allegations, if true,
sufficiently implicate consumer protection concerns as to allow IBEW to sue under
the statute. Accordingly, Walgreens’ motion to dismiss the ICFA claim asserted by
IBEW (Count IV) is denied.
Georgia Fair Business Practices Act
Walgreens also moves to dismiss IBEW’s claims under the Georgia Fair
Business Practices Act (GFBPA) (Count XIII), asserting that it applies only to
“natural persons.” Def.’s Mem. Supp. Mot. Dismiss at 15 (citing Ga. Code. Ann. § 101-392(a)(6)). In support, Walgreens relies on Pasternak & Fidis, P.C. v. Recall Total
Info. Mgmt., Inc., 95 F. Supp. 3d 886, 908 (D. Md. 2015).
In turn, Plaintiffs argue that the term “consumer” is only intended to modify
the type of transactions and practices that are actionable, not the type of plaintiff
that can sue. See Ga. Code Ann. §10-1-393(a) (prohibiting “[u]nfair or deceptive acts
or practices in the conduct of consumer transactions and consumer acts or practices
in trade or commerce”) (emphasis added); §10-1-399(a), §10-1-392(a)(24) (allowing an
action to be brought by “[a]ny person who suffers injury or damages . . . as a result of
consumer acts or practices in violation of this part, . . . or whose business or property
has been injured or damaged as a result of such violations,” with “person” defined to
include business entities and trusts) (emphasis added). Along these lines, Plaintiffs
point out that §10-1-399 authorizes “[a]ny person who suffers injury or damages . . .
as a result of consumer acts or practices in violation of [the statute]” to file suit and
that “person” is defined as “a natural person, corporation, trust, partnership,
incorporated or unincorporated association, or any other legal entity. Ga. Code. Ann.
The Court is persuaded that Plaintiffs have the better argument. Although
the Pasternak court was right that the definition of “consumer” was amended in 1996
to apply only to “natural persons,” the statute by its plain language allows “persons,”
including trusts and incorporated and unincorporated associations, to file private
causes of action. Thus, business entities have the capacity to sue under the act, but
the allegedly deceptive actions and practices that are the subject of the suit must be
those directed at natural persons.
This is consistent with the Georgia appellate
court’s holding in Inkaholiks Luxury Tattoos Georgia, LLC. v. Parton, 751 S.E.2d 561,
563–64 (Ga. App. Ct. 2013), which recognized that businesses can sue for trademark
infringement under the GFBPA, because such actions are intended to confuse
consumers. Accord Abbasi v. Bhalodwala, 149 F. Supp. 3d 1372, 1279–80 (M.D. Ga.
2015). 16 Accordingly, Walgreens’ motion to dismiss Count XIII as to IBEW is denied.
That said, IBEW may only sue to remedy its own individual damages. It may not sue
in a representative capacity on behalf of its members. See Friedlander v. PDK Labs, Inc., 465
S.E.2d 670, 671 (Ga. 1996).
Missouri Merchandising Practices Act
Finally, Walgreens moves to dismiss IBEW’s claims under the Missouri
Merchandising Practices Act (MMPA) (Count XX), as the MMPA permits suit only for
a “person who purchases or leases merchandise primarily for personal, family or
household purposes,” and IBEW does not allege that it purchased prescriptions for its
own personal, family or household purposes. Def.’s Mem. Supp. Mot. Dismiss at 15
(citing Mo. Ann. Stat. § 407.025(1)). Here, too, Plaintiffs point out that “person” is
defined to include a “trust,” like IBEW. Pls.’ Resp. Mot. Dismiss at 19 (citing Mo.
Ann. Stat. § 407.010(5)). Plaintiffs argue that IBEW can bring suit under the statute
because IBEW paid for prescriptions for the personal use of its beneficiaries. Id.
Several courts have held that health plans or other third-party payors do not
have a private right of action under the MMPA for purchases the entity made for
beneficiaries. See In re Express Scripts, Pharmacy Benefits Mgmt. Litig., No. MDL
No. 1672, 2006 WL 2632328, at *10 (E.D. Mo. Sept. 13, 2006) (finding that a healthbenefit plan’s purchase of pharmacy benefit management services were for a business
purpose—to serve the plan’s clients—rather than for the plan’s personal, family, or
household purposes); In re Actimmune Mktg. Litig., No. C 08-02376 MHP, 2010 WL
3463491, at *12 (N.D. Cal. Sept. 1, 2010), aff’d, 464 F. App’x 651 (9th Cir. 2011)
(“Although the term ‘person’ explicitly includes corporations like GEHA, the [MMPA]
has been interpreted as requiring that a person purchase the property for his, her or
its own ‘personal, family or household purposes.’”); United Food & Commercial
Workers Local 1776 & Participating Emp’rs Health & Welfare Fund v. Teikoku
Pharma USA, Inc., 74 F. Supp. 3d 1052, 1082–83 (N.D. Cal. 2014) (dismissing a
health care plan’s claims under the MMPA on the basis that the relevant purchases
were not made for the plan’s own personal, family or household purposes). The Court
finds the reasoning in these cases persuasive. 17 Because IBEW did not purchase
prescription drugs for its own use, the Court grants Walgreens’ motion to dismiss the
MMPA claim on that basis.
In sum, the Court denies Walgreens’ motion to dismiss IBEW’s claims under
the ICFA (Count IV) and the GFBPA (Count XIII), but grants its motion to dismiss
IBEW’s claims under the MMPA (Count XX).
Statutes Prohibiting Class Actions
Walgreens contends that Plaintiffs’ claims under the GFPBA (Count XIII), the
Louisiana Unfair Trade Practices and Consumer Protection Act (Count XV), and the
South Carolina Unfair Trade Practices Act (Count XXVI) must be dismissed for
failure to state a claim, as those statutes prohibit class actions. Def.’s Mem. Supp.
Mot. Dismiss at 15. But Plaintiffs have not yet even moved for class certification.
Whether Plaintiff Termine, for example, can bring an individual claim under the
Louisiana Unfair Trade Practices and Consumer Protection Act is unaffected by
The difference between the MMPA and the GFBPA is that the latter allows any
“person who suffers injury or damage” as a result of the alleged violations to file a private
cause of action (so long as the challenged actions were directed at natural persons). Ga. Code
Ann. §10-1-392(a)(24). By contrast, MMPA expressly limits private causes of action to any
“person who purchases or leases merchandise primarily for personal, family or household
purposes.” Mo. Ann. Stat. § 407.025(1).
whether the statute prohibits class actions. The Court therefore denies the motion to
dismiss on this basis as being premature.
Minnesota Unlawful Trade Practices Act
IBEW asserts a claim (Count XVIII) for violation of the Minnesota Unlawful
Trade Practices Act (MUTPA), alleging that Walgreens violated Minn. Stat. Ann.
§ 325D.12(3) (West 2017), which provides that “[n]o person shall, in connection with
the sale of merchandise at retail, . . . display price tags or price quotations in any
form showing prices which are fictitiously in excess of the actual prices at which such
merchandise is regularly and customarily sold at retail . . . .” Arguing solely that
IBEW fails to plead that Walgreens “display[ed]” the relevant prices, Walgreens
moves to dismiss Count XVIII for failure to state a claim. Def.’s Mem. Supp. Mot.
Dismiss at 18.
For its part, IBEW contends that the inflated prices reported and charged to
IBEW “constitute ‘price quotations’” within the meaning of the act, Am. Compl.
¶ 308, and that, by electronically reporting inflated U&C amounts during the claims
adjudication process, Walgreens “displayed” those price quotations within the
meaning of MUTPA. Pls.’ Resp. Mot. Dismiss at 22. Walgreens contends that such a
communication of prices does not qualify, as a matter of law, as a “display.” Def.’s
Mem. Supp. Mot. Dismiss at 18.
MUTPA does not define “display,” and there is effectively no case law on
§ 325D.12(3). 18 Minnesota law dictates that, “[w]hen construing the language of a
statute, [courts] must give words and phrases their plain and ordinary meaning.”
Johnson v. Cook Cty., 786 N.W.2d 291, 293 (Minn. 2010) (citing Minn. Stat. Ann.
§ 645.08 (2008)). “When there is no applicable statutory definition, [courts] often
consult dictionary definitions to discern a word’s plain meaning.” Wayzata Nissan,
LLC v. Nissan N. Am., Inc., 875 N.W.2d 279, 286 (Minn. 2016). A typical dictionary
definition defines “display” to have several meanings, including “to present to view,”
“to exhibit ostentatiously,” “to show (images or information) on a screen,” and “to
manifest or reveal.”
Display, The American Heritage Dictionary of the English
Language (5th ed. 2018). See also Wayzata Nissan, 875 N.W. 2d at 286 (consulting
the American Heritage Dictionary for the definition of “dealership”).
Given the word’s context in the provision, the Court interprets “display” in
§ 325D.12(3) to mean “to present for viewing.” This construction is consistent with
the context in which the term appears—“[n]o person shall . . . display price tags or
price quotations in any form showing prices which are fictitious.”
Both parties rely on Nunez v. Best Buy Co., Inc., which appears to be the only case
citing this provision of MUTPA. See Pls.’ Resp. Mot. Dismiss at 22; Def.’s Mem. Supp. Mot.
Dismiss at 18 (both citing Nunez, 315 F.R.D. 245, 249 (D. Minn. 2016)). Walgreens contends
that the MUTPA claim in Nunez was dismissed because the plaintiff did not specify the price
display he relied upon, Def.’s Mem. Supp. Mot. Dismiss at 18; Plaintiffs assert that Nunez is
an example of “[c]ourts . . . broadly interpret[ing] ‘display’ to encompass prices quoted
electronically in emails or listed on websites,” Pls.’ Resp. Mot. Dismiss at 22. Both
arguments mischaracterize Nunez, which dismissed en masse ten fraud-related claims,
including a claim under MUTPA, for failure to plead with particularity under Fed. R. Civ.
Proc. 9(b). Nunez, 315 F.R.D. at 249.
construction would plausibly encompass a pharmacist displaying an artificially
inflated price to Consumer Plaintiffs on a register, before the transaction is finalized,
or the transmission of an artificially inflated price to an insurer or third-party payor
for their approval and payment. Accordingly, Walgreens’ motion to dismiss Count
XVIII for failure to state a claim is denied.
New York General Business Law § 349
Plaintiff Bullard asserts a claim (Count XXIII) against Walgreens for a
violation of New York’s General Business Law § 349. Walgreens moves to dismiss
the claim on the basis that Plaintiff Bullard has not plausibly pleaded the causation
element of her claim. According to Walgreens, as a participant in a Medicare Part D
prescription drug insurance plan, Plaintiff Bullard was not eligible for the PSC, see
Am. Compl. ¶¶ 10, 23, and therefore Walgreens’ purported misrepresentations could
not have injured her. Def.’s Mem. Supp. Mot. Dismiss at 17–18.
But whether Plaintiff Bullard was eligible for the PSC is not relevant to her
claim under GBL § 349. Plaintiff Bullard alleged that Walgreens harmed her by
reporting fraudulently inflated prices to her insurance provider, resulting in inflated
copayment, coinsurance and deductible amounts for which Plaintiff Bullard was
Am. Compl. ¶ 370.
Such an allegation is sufficient to satisfy the
causation requirement of § 349. See N.Y. General Business Law § 349(h) (McKinney
2014) (granting “any person who has been injured by reason of any violation of this
section” the right to “bring an action in his own name”). The Court therefore denies
Walgreens’ motion to dismiss Count XXIII.
Ohio Deceptive Trade Practices Act
IBEW alleges that Walgreens violated the Ohio Deceptive Trade Practices Act
(ODTPA) (Count XXV). Walgreens moves to dismiss the claim for failure to state a
claim, contending that the ODTPA, Ohio Rev. Code § 4165.01 et seq, requires
Plaintiffs to be in competition with Walgreens. Def.’s Mem. Supp. Mot. Dismiss at
The Court cannot find any support for Walgreens’ argument that prospective
plaintiffs must be in competition with the defendant to assert a claim under the
Rather, as Plaintiffs point out, the ODTPA renounces any such
requirement. See Ohio Rev. Code §4165.02(B) (“In order to prevail [on an ODTPA
claim], a complainant need not prove competition between the parties to the civil
Walgreens also argues in its reply brief that IBEW’s claim under the ODTPA
must be dismissed because IBEW has failed to demonstrate that it satisfies the zoneof-interest and proximate-cause pleading requirements under Lexmark Int’l, Inc. v.
Static Control Components, Inc. Def.’s Rep. Mot. Dismiss at 11 (citing 134 S. Ct.
1377, 1382 (2014)). But Walgreens has waived this argument by addressing it for the
first time on reply, see Griffin v. Bell, 694 F.3d 817, 822 (7th Cir. 2012), and in any
event, the argument is not developed. See M.G. Skinner, 845 F.3d at 321.
Accordingly, Walgreens’ motion to dismiss IBEW’s ODTPA claim on the basis
that it has not alleged competition with Walgreens is denied.
Texas Deceptive Trade Practices Act
Plaintiff Forth asserts a claim for two violations of the Texas Deceptive Trade
Practices Act (TDTPA) (Count XXVIII). Tex. Bus. & Com. Code Ann. § 17.01 et seq
(West 2017). Plaintiff Forth alleges that Walgreens “fail[ed] to disclose information
concerning goods or services which was known at the time of the transaction if such
failure to disclose such information was intended to induce the consumer into a
transaction into which the consumer would not have entered had the information
been disclosed,” in violation of § 17.46(b)(24); and engaged in “unconscionable actions
or courses of action” against her, in violation of § 17.50(a)(3). Am. Compl. ¶¶ 417,
419. Walgreens moves to dismiss only the claim based on an “unconscionable action
or course of action,” contending that Plaintiff Forth has not plausibly alleged an
unconscionable action. Def.’s Mem. Supp. Mot. Dismiss at 18–19.
The TDTPA defines an “unconscionable action or course of action” as “an act or
practice which, to a consumer’s detriment, takes advantage of the lack of knowledge,
ability, experience, or capacity of the consumer to a grossly unfair degree.” § 17.45(5).
“Unconscionability under the DTPA is an objective standard for which scienter is
irrelevant.” Ins. Co. of N. Am. v. Morris, 981 S.W.2d 667, 677 (Tex. 1998) (citing
Chastain v. Koonce, 700 S.W.2d 579, 583 (Tex. 1985)). “To prove an unconscionable
action or course of action, a plaintiff must show that the defendant’s acts took
advantage of her lack of knowledge and that the resulting unfairness was glaringly
noticeable, flagrant, complete and unmitigated.” Id. (citation and internal quotation
According to Walgreens, because pricing information on the PSC was publicly
available, Plaintiff Forth “cannot plausibly allege that [she] lacked the knowledge,
ability, experience, or capacity to determine whether [her] copayments, coinsurance,
or deductible amounts exceeded the PSC price [she] would have paid for certain
prescription drugs had [she] chosen to join the PSC program.” Def.’s Mem. Supp.
Mot. Dismiss at 19. But Walgreens misstates Plaintiffs’ theory of the case. Plaintiffs
do not allege that they were unaware of the existence of the PSC. Rather, they allege
that Walgreens implemented a fraudulent dual-pricing scheme that took advantage
of Plaintiffs’ reasonable assumption that, because they had health insurance, they
would not be paying more than direct-pay customers for their prescriptions. See Am.
Compl. ¶¶ 15, 18, 21, 24, 27.
According to Plaintiffs, Walgreens’ dual pricing scheme overcharged Plaintiff
Forth by $255 for fifteen prescription purchases of PSC generic drugs.
Id. ¶ 14.
That, combined with Plaintiff Forth’s plausibly alleged ignorance of Walgreens’
internal pricing determinations, id. ¶ 418, suffices to plead that Walgreens “took
advantage of her lack of knowledge and that the resulting unfairness was glaringly
noticeable, flagrant, complete and unmitigated.”
See Morris, 981 S.W.2d at 677.
Accordingly, the Court denies Walgreens’ motion to dismiss Plaintiff’s TDTPA claim.
Claims for Declaratory and Injunctive Relief
Plaintiffs seek declaratory and injunctive relief under the Declaratory
Judgment Act, 28 U.S.C. § 2201, et seq., contending that they face a substantial and
imminent risk of future harm (Count XXIX). Am. Compl. ¶¶ 433, 434. IBEW also
alleges violations of the Minnesota Uniform Deceptive Trade Practices Act
(MUDTPA) (Count XII) and the Georgia Uniform Deceptive Trade Practices Act
(GUDTPA) (Count XIX), both of which provide only for injunctive relief. See Minn.
Stat. Ann. § 325D.45 (West 2017); Ga. Code. Ann. § 10-1-373 (2017).
Walgreens moves to dismiss the claims under the Declaratory Judgment Act,
MUDTPA, and GUDTPA for lack of standing, asserting that Plaintiffs cannot
plausibly plead any real or immediate threat of future harm. Def.’s Mem. Supp. Mot.
Dismiss at 17, 19. Specifically, because Plaintiffs are now aware that Walgreens’
reported U&C pricing is higher than PSC pricing, Walgreens contends that those
Plaintiffs cannot be misled by the current pricing structure in the future. Id.
To establish standing to seek injunctive relief, Plaintiffs must plead a “‘real
and immediate’ threat of future injury as opposed to a threat that is merely
‘conjectural or hypothetical.’” Simic v. City of Chicago, 851 F.3d 734, 738 (7th Cir.
2017) (quoting City of Los Angeles v. Lyons, 461 U.S. 95, 102, (1983). “Past exposure
to illegal conduct” that is “unaccompanied by continuing, present adverse effects”
does not establish a present case or controversy. Id. (citing Lyons, 461 U.S. at 95–
Walgreens contends that Plaintiffs’ allegations demonstrate that any
possibility of future harm is “conjectural and remote.”
Def.’s Mem. Supp. Mot.
Dismiss at 20. Indeed, any threat of harm to the Consumer Plaintiffs is contingent
upon them returning to Walgreens and purchasing PSC-listed prescriptions using
insurance, a prospect which would seem unlikely, as they claim that they would not
have filled their prescriptions at Walgreens if they had known about the dual pricing
structure. See Am. Compl. ¶ 111 (“Had they known Walgreens was reporting to and
charging them inflated and false amounts, they would not have proceeded with the
Despite their new knowledge, the Consumer Plaintiffs plead that they in fact
plan to return to Walgreens. See, e.g., Am. Compl. ¶ 25 (“To maintain continuity of
her medical care, Ms. Bullard anticipates filling future prescriptions for PSC
Generics, and thus faces the prospect of paying additional inflated amounts in the
future if Walgreens continues its wrongful conduct.”). But now that the Consumer
Plaintiffs are aware of Walgreens’ pricing practices, those that are eligible for
participation in the PSC program 19 can enroll and pay directly, rather than using
insurance, thus accessing lower prices. Paying directly will not affect the Consumer
Plaintiffs’ continuity of medical care. But the situation differs for Plaintiffs Forth,
Russo, and Bullard, who are ineligible for the PSC program due to their Medicare
coverage. See Am. Compl. ¶¶ 14, 20, 23. It is plausible that, to maintain continuity
of their medical care, they must continue filling their prescriptions at Walgreens.
The general rule is that consumer plaintiffs cannot seek injunctive relief once
they are aware of a deceptive practice. See Camasta v. Jos. A. Bank Clothiers, Inc.,
761 F.3d 732, 740–41 (7th Cir. 2014) (finding that a pleading of deceptive sales
practice, without more, does not entitle a consumer plaintiff to injunctive relief);
The Consumer Plaintiffs who are on Medicare are not eligible for participation in the
PSC. See Am. Compl. ¶ 66. Plaintiffs Forth, Russo, and Bullard carry insurance through
Medicare. Id. ¶¶ 14, 20, 23. Plaintiffs Gonzales and Termine carry private insurance. Id.
¶¶ 17, 26.
Mednick v. Precor, Inc., No. 14 C 3624, 2016 WL 5390955, at *8 (N.D. Ill. Sept. 27,
2016) (collecting cases where courts ruled that plaintiffs deceived by false advertising
did not have standing for prospective injunctive relief); c.f. Le v. Kohls Dep’t Stores,
Inc., 160 F. Supp. 3d 1096, 1110 (E.D. Wis. 2016). But the cases barring deceived
plaintiffs from seeking injunctive relief emphasize that the plaintiff at question
“made no allegation of risk of future harm.” Mednick, 2016 WL 5390955, at *8; see
Camasta, 761 F.3d at 740 (“Camasta’s claim is based solely on the conjecture that
because [the defendants] harmed him in the past, they are likely to harm him in the
Such cases differ from the instant case, where some of the Consumer
Plaintiffs plausibly allege that they will have no choice but to be injured in the
The Court thus finds that the Medicare-insured Consumer Plaintiffs—
Plaintiffs Forth, Russo, and Bullard—have standing to pursue injunctive relief.
Walgreens also argues that PSC-listed generics are readily available from
multiple pharmacy providers. But Plaintiffs allege that they are unable to avoid
future purchases of medically-necessary PSC Generics in order to maintain
continuity of care. Am. Compl. ¶¶ 33–34. Assuming this to be true, it is certainly
plausible that Walgreens may be the only reasonably convenient pharmacy provider
to the non-PSC-eligible Consumer Plaintiffs, and that those Plaintiffs must return to
Walgreens and purchase prescriptions for allegedly inflated amounts despite their
knowledge of the store’s pricing practices.
The Court similarly concludes that IBEW has standing to pursue injunctive
relief. Plaintiffs assert that third-party payors such as IBEW must continue to pay
for beneficiaries’ purchases of PSC-listed generics, as those drugs are medically
necessary. Am. Compl. ¶ 34. This appears to be a “real and immediate” risk of
injury to IBEW, and Defendants make no argument to the contrary.
In sum, the Court finds that Plaintiffs Forth, Bullard, Russo, and IBEW have
standing to pursue injunctive relief under the Declaratory Judgment Act (Count
XXIX), while Plaintiffs Termine and Gonzales do not. IBEW similarly has standing
to pursue injunctive relief under GUDTPA (Count XII) and MUDTPA (Count XIX).
The Court thus denies Walgreens’ motion to dismiss Counts XII, XIX and XXIX on
Tolling the Statute of Limitations
Plaintiffs assert in the Amended Complaint that the running of any statute of
limitations should be tolled because Walgreens fraudulently concealed its pricing
scheme. Am. Compl. ¶¶ 105–107. Walgreens seeks to dismiss Plaintiffs’ commonlaw claims prior to March 2012 and consumer fraud claims prior to March 2014 as
time-barred, contending that Plaintiffs cannot toll the statute of limitations because
the Amended Complaint “does not allege that Walgreens committed any affirmative
acts to conceal the PSC pricing system.” Def.’s Mem. Supp. Mot. Dismiss at 13.
Illinois law imposes a five-year statute of limitations for tort actions. 20 735 Ill.
Comp. Stat. Ann. 5/13-205 (West 2018); F.D.I.C. v. Wabick, 335 F.3d 620 (7th Cir.
Walgreens does not reference the specific statutes of limitations for the claims for
violations of the various consumer protection statutes in its motion to dismiss the claims
prior to March 2014. They have therefore waived the argument, but in any case, it is
immaterial to the Court’s analysis.
2003). But under the doctrine of fraudulent concealment, the statute of limitations is
tolled if fraud prevented discovery of the cause of action. Henderson Square Condo.
Ass’n v. LAB Townhomes, LLC, 46 N.E.3d 706, 716 (Ill. 2015), opinion modified on
denial of reh’g (Jan. 28, 2016) (citing 735 Ill. Comp. Stat. Ann. 5/13–215).
Because the statute of limitations is an affirmative defense, courts generally
do not dismiss claims under Rule 12(b)(6) for failure to be brought within
the statute of limitations. Chi. Bldg. Design, P.C. v. Mongolian House, Inc., 770 F.3d
610, 613 (7th Cir. 2014) (citing United States v. N. Trust Co., 372 F.3d 886, 888 (7th
For dismissal to be granted at the motion-to-dismiss stage, “the
allegations of the complaint itself [must] set forth everything necessary to satisfy the
affirmative defense.” Id. at 613–14 (quoting United States v. Lewis, 411 F.3d 838,
842 (7th Cir. 2005)). If there is “any set of facts that if proven would establish a
defense to the statute of limitations,” then a motion to dismiss should be denied.
Clark v. City of Braidwood, 318 F.3d 764, 768 (7th Cir. 2003) (emphasis in original).
Here, Plaintiffs have pleaded a set of facts that may establish the tolling of the
statute of limitations through the doctrine of fraudulent concealment, allowing the
claims to survive even if more than five years have passed since they accrued.
Plaintiffs allege that Walgreens knowingly made false representations “each time it
reported and charged artificially inflated prices for PSC generics,” Am. Compl.
¶¶ 112, 113, and further, that “Walgreens knew that Plaintiffs . . . would rely on the
accuracy of the price Walgreens reported to and charged them,” id. ¶ 114. These
allegations provide Plaintiffs a set of facts sufficient to overcome a statute of
limitations defense at the pleading stage.
See Clark, 318 F.3d at 768 (reversing
dismissal because complaint provided for the “possibility” that the statute of
limitations defense could be defeated).
Walgreens’ motion to dismiss Plaintiffs’
common-law claims prior to March 2012 and consumer fraud claims prior to March
2014 as time-barred is therefore denied.
For the reasons stated herein, Walgreens’ motion to dismiss  is granted in
part and denied in part. The Court grants Walgreens’ motions to dismiss Plaintiffs’
claims for negligent misrepresentation (Count II) and violation of the Missouri
Merchandising Practices Act (Count XX).
The Court also finds that Plaintiffs
Termine and Gonzales lack standing to pursue injunctive relief under the
Declaratory Judgment Act (Count XXIX). In all other respects, Walgreens’ motion to
dismiss is denied.
IT IS SO ORDERED.
John Z. Lee
United States District Judge
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