Eike et al v. Allergan, Inc. et al

Filing 147

ORDER denying 52 Motion to Dismiss for Failure to State a Claim; denying 54 Motion to Dismiss for Failure to State a Claim; denying 55 Motion to Dismiss for Failure to State a Claim; denying 56 Motion for oral argument; denying 57 Motion to Dismiss for Failure to State a Claim; granting 85 Motion to Strike. See order for details. Signed by Chief Judge David R. Herndon on 03/18/2014. (kbl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
CHARLENE EIKE, et al.,
Plaintiffs,
v.
ALLERGAN, INC., et al.,
Defendants.

No. 3:12-cv-01141-DRH-DGW

MEMORANDUM AND ORDER
HERNDON, Chief Judge:
Now before the Court is defendants Allergan, Inc., Allergan USA, Inc.,
Allergan Sales, LLC, Alcon Laboratories, Inc., Alcon Research Ltd., Falcon
Pharmaceuticals, Ltd., Sandoz, Inc., Bausch & Lomb Incorporated, Pfizer Inc.,
Merck & Co., Inc., Merck, Sharp & Dohme Corp., and Prasco, LLC’s (collectively
“defendants”) omnibus motion to dismiss (Doc. 52).

Defendants concurrently

moved for oral argument (Doc. 56) and filed defendant specific motions to
dismiss (Docs. 54, 55, 57). Specifically, defendants Merck & Co., Inc., Merck,
Sharp & Dohme Corp., (“Merck”), and Prasco LLC (“Prasco”) filed a motion to
dismiss (Doc. 54), defendants Alcon Laboratories, Inc. and Alcon Research, Ltd.
(collectively “Alcon”), Falcon Pharmaceuticals, Ltd. (“Falcon”), and Sandoz Inc.
(“Sandoz”) filed a consolidated motion to dismiss (Doc. 55), and defendant Pfizer
Inc. filed a motion to dismiss (Doc. 57). Plaintiffs thereafter responded in kind

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(Docs. 76, 77, 78, 79). Defendants replied (Docs. 81, 82, 83, 84). Plaintiffs then
moved to strike the replies (Doc. 85) and defendants responded to the motion to
strike (Doc. 89). After the motions were fully briefed, plaintiffs and defendants
filed a number of supplemental briefs (Docs. 93, 99, 100, 102-1, 106-1, 109,
115).
As a preliminary matter, the motion for oral argument (Doc. 56) is DENIED
and the motion to strike defendants’ reply briefs (Doc. 85) is GRANTED.
Pursuant to the Court’s Local Rules, “[r]eply briefs are not favored and should
be filed in only exceptional circumstances.” SD Ill. L.R. 7(c) (bold in original).
The Court finds that the circumstances listed in each of the replies do not meet
this standard. Furthermore, oral argument on these issues, given the extensive
briefing, is unnecessary.

For following reasons, the motions to dismiss are

DENIED.
I.

BACKGROUND

This is an action brought by Charlene Eike, Shirley Fisher, Jordan Pitler
and Alan Raymond (collectively “plaintiffs”), individually and on behalf of classes
of consumers who purchased prescription eye drops manufactured and sold by
defendants.

In the nine-count first amended complaint filed on February 22,

2013 (Doc. 44), plaintiffs allege that defendants sell their drops in plastic bottles
which produce a drop that is too big for the eye. Instead the drop creates wasted
runoff down the cheek, an unavoidable injury, and causes the plaintiffs to spend
more on additional purchases of the eye drop prescription products. In addition

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to the added cost, plaintiffs allege that large drops can lead to a serious health
risk when classes run out of their medication before their insurer or other thirdparty payor will reimburse them for a replacement bottle and instead they go
without the medication because they are unable to afford it.

Plaintiffs further

assert that smaller eye drops could be produced if the dimensions of the
eyedropper tip were adjusted and that smaller drops are just as effective.
Plaintiffs also assert that the FDA’s approval of a drug does not constrain a
company’s ability to modify its drop size. Plaintiffs argue that defendants actions
are unfair in violation of the Illinois Consumer Fraud & Deceptive Business
Practice Act (“ICFA”), 815 ILCS 505/1, et seq., and/or the Missouri Merchandising
Practices Act (“MMPA”), Mo. Rev. Stat. § 407.010, et seq.
On March 29, 2013, defendants filed an omnibus motion to dismiss (Doc.
52). In their omnibus motion, defendants argue five points: 1) that plaintiffs have
failed to allege sufficient facts to establish that the sale of medications that emit
eye drops larger than 15 microliters violates any public policy, is coercive or
oppressive, or causes substantial injury to the plaintiffs; 2) that the plaintiffs have
failed to plead a causal connection between defendants’ conduct and plaintiffs’
alleged damages; 3) that plaintiffs have failed to alleged any actual injury; 4)
plaintiffs have not satisfied federal pleading requirements under Rule 8(a); 5) the
plaintiffs’ claims are exempted for compliance with other laws or regulations; and
6) that the claims are preemepted by federal law.
While the omnibus motion to dismiss was submitted on behalf of all the

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defendants, other motions to dismiss were filed concurrently on behalf of
particular defendants.

Where relevant, the Court addresses the arguments in

these additional motions.

Defendants and plaintiffs were also permitted to

submit several supplemental briefs.

After the motions were fully briefed, the

Supreme Court issued its opinion in Mutual Pharm. Co. v. Bartlett. 133 S.Ct.
2466 (2013).

The Court allowed supplemental briefing on the issues therein

presented. The Court also allowed supplemental briefing regarding the issue of
plaintiffs’ statutory standing.

The letters will be addressed herein also where

relevant. Finally, the Court has also had the benefit of fully reviewing the briefing
in the related case, Fields v. Alcon Laboratories, Inc., No. 13-197 (S.D. Ill.)
(hereinafter Fields).
II.

ANALYSIS

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
challenges the sufficiency of the complaint for failure to state a claim upon which
relief may be granted. Gen. Elc. Capital Corp. v. Lease Resolution Corp., 128
F.3d 1074, 1080 (7th Cir. 1997). To survive a motion to dismiss, a complaint
must establish a plausible right to relief. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 555 (2007). The allegations of the complaint must be sufficient “to raise a
right to relief above the speculative level.” Id.
In making this assessment, the district court accepts as true all wellpleaded factual allegations and draws all reasonable inferences in the plaintiff’s
favor. See Rujawitz v. Martin, 561 F.3d 685, 688 (7th Cir. 2009); St. John’s

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United Church of Christ v. City of Chi., 502 F.3d 616, 625 (7th Cir. 2007). Even
though Twombly (and Ashcroft v. Iqbal, 556 U.S. 662 (2009)) retooled federal
pleading standards, notice pleading remains all that is required in a complaint:
“A plaintiff still must provide only enough detail to give the defendant fair notice of
what the claim is and the grounds upon which it rests, and through his
allegations, show that it is plausible, rather than merely speculative, that he is
entitled to relief.” Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008)
(internal quotations and citations omitted).
A. Unfair Practice
Defendants first assert that plaintiffs have failed to allege an unfair practice
required by both the ICFA and the MMPA. Pfizer also addresses this argument in
its defendant specific motion (Doc. 57-1, p 1-4). To determine whether a business
practice is unfair, the Court considers “(1) whether the practice offends public
policy; (2) whether it is immoral, unethical, oppressive, or unscrupulous; [and]
(3) whether it causes substantial injury to consumers.” Robinson v. Toyota Motor
Credit Corp., 775 N.E.2d 951, 961 (Ill. 2002). See also Ward v. West County
Motor Co., Inc., 403 S.W.3d 82, 84 (Mo. 2013) (defining unfair practice similarly
under Missouri law). “All three criteria do not need to be satisfied to support a
finding of unfairness [pursuant to the ICFA]. A practice may be unfair because of
the degree to which it meets one of the criteria or because to a lesser extent it
meets all three.”

Id.

Unfairness under the ICFA “depends on a case-by-case

analysis.” Siegel v. Shell Oil Co., 612 F.3d 932, 935 (7th Cir. 2010). A plain

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reading of Missouri regulations indicates that the MMPA requires a finding that 1)
the practice offends public policy or 2) is unethical, oppressive, or unscrupulous
and presents a risk of, or causes, substantial injury to consumers. Ward, 403
S.W.3d at 84 (citing Mo. Code Regs. Ann. tit. 15, § 60-8.020).
The Court finds that plaintiffs have sufficiently alleged an unfair practice
under both the ICFA and the MMPA.

The complaint clearly alleges that

defendants sell their products in containers “designed to dispense eye drops
larger than the capacity of the human eye” (Doc. 44 at 36, 38). They further allege
that this practice violates the public policy of both Missouri and Illinois as
expressed by the Federal Trade Commission’s Policy Statement on Unfairness. 1
Both the ICFA and the MMPA accept the interpretations of the Federal Trade
Commission as evidencing offense of a public policy, herein relied upon by
plaintiffs in their complaint. 815 ILCS 505/2; Mo. Code Regs. Tit. 15, § 60-8.020.
Plaintiffs further allege that defendants violations cause plaintiffs and class
members “to suffer actual damage measured by the allocated purchase price for
the portion of their eye drops in excess of 15 μL” (Doc. 44 at 37, 39).
B. Proximate Cause
Defendants next assert that plaintiffs have failed to plead that defendants’
unfair conduct caused them injury. Specifically, they argue that plaintiffs fail to
allege proximate causation because the amended complaint does not include any
allegations that establish that plaintiffs’ doctors would discontinue prescribing
1

FTC Policy Statement on Unfairness, Appended to In the Matter of International Harvester
Company, 104 F.T.C. 949, 1070 (1984), available at http://www.ftc.gov/ftc-policy-statement-onunfairness (codified at 15 U.S.C. § 45(n)).
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them eye drop medications that emit the larger drops. The Court does not find
that defendants have met their burden of proving that the physicians are an
intervening cause. See BCS Services, Inc. v. Heartwood 88, LLC, 637 F.3d 750,
757 (7th Cir. 2011). It is not unforeseeable that a physician would be responsible
for prescribing the prescription eye drops to plaintiffs.

Nor would it be

unreasonable to infer, as the Court must, that patients would buy less medication
absent defendants’ conduct.
C. Actual Injury
Defendants also argue that plaintiffs have not pled that they have sustained
actual damages. Defendants assert that the benefit-of-the-bargain rule applies and
that the measurement of damages is properly calculated as “ ‘the difference of
between the value of the product as represented and the actual value of the
product as received.’ ” (Doc. 53 at 11) (citing Polk v. KV Pharmaceutical
Company, 2011 WL 6257466, at *5 (E.D. Mo. Dec. 15, 2011)).

Defendants

further assert that plaintiffs fail to allege any fact that establish a cost savings to
plaintiffs if defendants were to sell bottles that dispense smaller drops (Doc. 53 at
11).
The Court finds that plaintiffs have plausibly pled actual damages. The
benefit-of-the-bargain rule does not apply in this case. Plaintiffs are not asserting
a misrepresentation but instead an unfair practice. See Frye v. L’Oreal USA,
Inc., 583 F.Supp.2d 954, 957 (N.D. Ill. Oct. 28, 2008). Furthermore, plaintiffs
allege that the unfair practice caused “Plaintiffs and Class Members to suffered

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actual damage measured by the allocated purchase price for the portion of their
eye drops in excess of 15 μL” (Doc. 44 at 37, 39). At this stage of the litigation,
the Court finds this sufficient to survive review.
D. Federal Pleading Requirements Pursuant to Rule 8(a) and Rule 9(b)
Defendants next assert that plaintiffs have not satisfied federal pleading
requirements under Rule 8(a) because “they have not identified the specific
products they each used, when they were prescribed, how long they used them,
what information their healthcare providers or defendants may have provided
them about administering the drops, the quantity of solution they received with
each prescription, or how much solution was allegedly ‘wasted’ with each
plaintiff’s administration of the drops” (Doc. 53 at 14). Plaintiffs assert that this
is truly an issue for a class certification motion. The Court allowed supplemental
briefing on the issue (Docs. 106-1, 115).
The Court finds that the plaintiffs have sufficiently pled facts pursuant to
Rule 8(a).

Each plaintiff clearly alleges from which defendant he or she

purchased and used eye drops (Doc. 44 at 4-5). Furthermore, plaintiffs’ claims
are premised on their seeking to represent classes of consumers who bought and
used similar products from these companies.

They need not have used every

prescription eye drop manufactured by every defendant. The issue of substantial
similarity is one for class certification review, not an issue that the Court will take
up on a motion to dismiss.
In its defendant-specific motion to dismiss, Pfizer asserts that plaintiffs fail

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to state any specific allegations about Xalatan (Doc. 57-1 at 4).

The Courts

reasoning above applies to this assertion. Pfizer also suggests that plaintiffs must
meet Rule 9(b)’s heightened pleading requirement (Doc. 57-1 at 4).

Rule 9(b)

requires that “[i]n all averments of fraud or mistake, the circumstances
constituting fraud or mistake shall be stated with particularity.” Fed. R. Civ. P.
9(b). In this case, plaintiffs allege an unfair practice not one of fraud or mistake.
Therefore Rule 9(b) does not apply. See Windy City Metal Fabricators & Supply,
Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 670 (7th Cir. 2008).
E. Statutory Exclusion
Defendants, both in their omnibus motion to dismiss and in Merck and
Prasco’s defendant-specific motion to dismiss, assert that the Court should also
dismiss plaintiffs’ claims because ICFA and Missouri law exempt defendants from
plaintiffs’ claims. The Court also addressed this issue as it applies to the ICFA in
the related case Fields.

Statutory exemption is an affirmative defense not

normally appropriate for a Rule 12(b)(6) motion.

Only when the affirmative

defense appears clearly on the face of the complaint, is dismissal under Rule
12(b)(6) appropriate.

As in Fields, upon a thorough review of the amended

complaint, the Court finds that the affirmative defense of statutory exclusion does
not appear on the face of the complaint. See Independent Trust Corp. v. Stewart
Information Services Corp., 665 F.3d 930, 935 (7th Cir. 2012).
Defendants admit that there is not a “similarly explicit safe-harbor
provision” under Missouri law (Doc. 53 at 17). Instead defendants argue that

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“there is no plausible basis to hold defendants liable under the MMPA when they
fully complied with federal laws that govern the allegedly harmful acts complained
of here” (Doc. 53 at 17). In support of its assertion, defendants cite to Weber v.
St. Louis County. 342 S.W.3d 318, 324 (Mo. 2011) (en banc). This case differs,
however, because in that case Saint Louis County’s alleged unfair practice was
explicitly provided for by county ordinance. Id. “It is not unlawful to enforce
valid laws.” Id. Not only is the connection defendants are trying to make to this
case too attenuated to withstand review, again, plaintiffs are not required to
anticipate every possible affirmative defense in their complaint.
F. FDA Preemption
Defendants also assert that plaintiffs’ claims are preempted because the
changes plaintiffs seek under state law conflict with federal law regulating
pharmaceutical products. Defendants rely on the Supreme Court’s decision in
Mensing, asserting that the case establishes that state law claims are preempted
where the defendant lacks unilateral authority under federal law to comply with
an alleged state law requirement (Doc. 13 at 8). PLIVA, Inc. v. Mensing, 131 S.Ct.
2567 (2011). Specifically, defendants argue that the FDA requires prior agency
approval for any substantial change to a product (“major changes”). These “major
changes,” they assert, include the quantitative formulation of the drug product
and the specifications provided in the approved application (Doc. 13 at 9) (citing
21 C.F.R. § 314.70(b)(2)(i), (ii)). Defendants further rely on FDA Guidance to
suggest that a major change requiring approval includes a change in the fill

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volume (Doc. 13 at 9) (citing FDA Guidance for Industry, Changes to an Approved
NDA or ANDA, Questions and Answers (January 2001) at 9).
Plaintiffs respond asserting that defendants have not met their “demanding”
burden of proving that smaller volumes of medication would require changes not
allowed under the FDA because defendants have not identified FDA approval of
the size of any of their drops. They argue that, in fact, the varied sizes of the
drops belie the notion that the manufacturers cannot change drop size.
Furthermore, plaintiffs argue that defendants have changed the sizes of their
drops. In the alternative, plaintiffs assert that even if the FDA does approve drop
size, that pursuant to Wyeth, the manufacturers must prove that “the FDA would
not have approved a change.”

555 U.S. at 571.

Finally, plaintiffs argue that

“there is no record here on which to decide it” (Doc. 79 at 19).
The Court also allowed and subsequently reviewed plaintiffs’ and
defendants’ supplemental briefs regarding the federal preemption issue including
their analysis of Bartlett (Docs. 93, 99, 100, 102-1, 109). 133 S.Ct. 2466 (2013).
The Supremacy Clause establishes that federal law “shall be the supreme
Law of the Land . . . any Thing in the Constitution or Laws of any State to the
Contrary notwithstanding.” U.S. Const., Art. VI, cl. 2. Conflict preemption arises
where “it is impossible for a private party to comply with both state and federal
requirements.” Bartlett, 133 S.Ct. at 2473 (emphasis added) (internal quotation
marks omitted). Conflict may also arise when “the state law stands as an obstacle
to the accomplishment and execution of the full purposes and objectives of

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Congress.” Hillman v. Maretta, 133 S.Ct. 1943, 1950 (2013) (internal quotation
marks omitted). Federal preemption is an affirmative defense upon which the
defendants bear the burden of proof. Village of DePue, III v. Exxon Mobil Corp.,
537 F.3d 775, 786 (7th Cir. 2008). “The question for ‘impossibility’ is whether
the private party could independently do under federal law what state law
requires of it.”

Mensing, 131 S.Ct. at 2579 (citing Wyeth, 555 U.S. at 573

(finding no pre-emption where the defendant could “unilaterally” do what state
law required)).
As in Fields, upon initial review, the Court finds that there remain
questions of fact yet to be determined and that the record needs to be further
developed. Further, the Court concludes that plaintiffs have provided defendants
with sufficient notice of a plausible claim to survive a motion to dismiss.
G. Generic Distributors and Manufacturers
In their defendant-specific motions to dismiss (Doc. 54, 55), Prasco and
Alcon assert that the allegations against them are preempted pursuant to Mensing
and its progeny. They argue that Mensing stands for the proposition that state
law claims are only viable against entities that have unilateral authority under
federal law to comply with the alleged state law requirement. They assert that
distributors like Prasco, Falcon, and Sandoz are exempt because they do not have
this authority. In this case, Prasco distributes authorized generic Merck products
sold under Merck’s NDA and Falcon and Sandoz market and sell generic
products under Alcon’s NDA. Therefore, they assert that they do not have the

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authority to submit supplemental applications, which, as noted above, defendants
argue would be required in this instance.
The Court finds this argument unpersuasive. First, as indicated above, the
record has not yet been developed sufficiently to decide the federal preemption
question. Second, unlike in the Mensing case where the generic distributor had
to use the same warning label as the brand-name product, here plaintiffs indicate
that the generic distributors have independent authority to modify the dropper
size. Again, without commenting on the merits of this argument, the Court finds
that the record requires further development.
Alcon additionally asserts that plaintiffs’ claims against Alcon as a generic
manufacturer should also be dismissed under Mensing because federal
regulations require that generic products have the same route of administration,
strength, and dosage as the brand products. Defendant, however, does not site to
any authority in support of this assertion. Therefore, the Court concludes that
Alcon has not met its burden.
H. Pfizer Label Argument
In its defendant-specific motion (Doc. 57), Pfizer argues that reducing the
drop size would require a reformulation of the product and label (Doc. 57-1 at 24).

Plaintiffs assert that the product as sold already varies from the asserted

formulation and current label.

Without commenting on the merits of this

assertion, the Court finds that the record has not yet been sufficiently developed
as to this issue to address it upon review of the motion to dismiss.

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III.

CONCLUSION

Accordingly, defendants’ motions to dismiss (Docs. 52, 54, 55, 57) are
DENIED. Further, defendants’ motion for oral argument (Doc. 56) is DENIED
and plaintiffs’ motion to strike defendants’ reply briefs (Doc. 85) is GRANTED.
IT IS SO ORDERED.
Signed this 18th day of March, 2014.

Digitally signed by
David R. Herndon
Date: 2014.03.18
13:58:22 -05'00'
Chief Judge
United States District Court

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