Painters and Allied Trades District Council 82 Health Care Fund v. Forest Pharmaceuticals, Inc. et al
Filing
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Judge Nathaniel M. Gorton: ENDORSED ORDER entered. MEMORANDUM AND ORDER: "For the foregoing reasons 1) defendants' motion to dismiss Painters' amended complaint (Civil Action No. 13-cv-13113, Docket No. 18 ) is as to Count V, ALLOWED , but is otherwise DENIED; and 2) defendants' motion to dismiss Allied Services/NM UFCW complaint (Civil Action No. 14-cv-10784, Docket No. 11 ) is ALLOWED. So ordered."Associated Cases: 1:09-md-02067-NMG, 1:13-cv-13113-NMG, 1:14-cv-10784-NMG(Moore, Kellyann)
United States District Court
District of Massachusetts
In re:
CELEXA AND LEXAPRO MARKETING AND
SALES PRACTICES LITIGATION
PAINTERS AND ALLIED TRADES
DISTRICT COUNCIL 82 HEALTH CARE
FUND,
Plaintiff,
v.
FOREST LABORATORIES, INC. and
FOREST PHARMACEUTICALS, INC.,
Defendants.
________________________________
ALLIED SERVICES DIVISION WELFARE
FUND and NEW MEXICO UFCW UNION’S
AND EMPLOYER’S HEALTH AND
WELFARE TRUST FUND
Plaintiffs,
v.
FOREST LABORATORIES, INC. and
FOREST PHARMACEUTICALS, INC.,
Defendants.
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MDL No.
09-2067-NMG
Civil Action No.
13-13113-NMG
Civil Action No.
14-10784-NMG
MEMORANDUM & ORDER
GORTON, J.
These two cases arise out of the marketing and sales of the
related anti-depressant drugs Celexa and Lexapro by defendants
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Forest Laboratories, Inc. and Forest Pharmaceuticals, Inc.
(“defendants” or, collectively, “Forest”).
Plaintiff Painters
and Allied Trades District Council 82 Health Care Fund
(“Painters”) and plaintiffs Allied Services Division Welfare
Fund and New Mexico UFCW Union’s and Employers’ Health and
Welfare Trust Fund (“Allied Services/NM UFCW”) are health and
benefit funds providing benefits to covered members and their
families.
They act as third-party payors (“TPPs”) that
reimburse medical expenses of plan members.
Painters alleges that defendants violated the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), Minnesota
Consumer Fraud Act, Minnesota Unfair Trade Practices Act and
Minnesota Deceptive Trade Practices Act by misrepresenting and
concealing material information about the efficacy of Celexa and
Lexapro in treating major depressive disorder (“MDD”) in
pediatric patients.
Allied Services/NM UFCW allege that
defendants violated RICO, Illinois and New Mexico consumer
protection statutes, the consumer fraud laws of 46 other states
and was unjustly enriched.
Pending before the Court are defendants’ motions to dismiss
the Painters first amended complaint (“FAC”) and the Allied
Services/NM UFCW complaint.
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I.
Background
Celexa and Lexapro are closely-related selective serotonin
reuptake inhibitor antidepressants.
Forest obtained the
approval of the Food and Drug Administration (“FDA”) to market
Celexa (citalopram) for adult use in 1998 and to market Lexapro
for adult use in 2002.
It later sought to market both drugs for
use in treating MDD in children and adolescents.
A.
FDA approval process
In order to obtain FDA approval to market Celexa and
Lexapro as effective for pediatric and adolescent use, Forest
was required to make a sufficient showing to the FDA that the
drugs would be more effective than placebos in treating MDD in
pediatric or adolescent patients.
The FDA typically requires
parties to submit at least two “positive” placebo-controlled
clinical trials supporting such use.
Drug studies are deemed “positive” if they show
statistically significant improvements for patients who are
administered a drug rather than a placebo.
In contrast, a
“negative” study is one that indicates no statistically
significant difference in outcomes between patients who are
administered the drug and those who receive a placebo.
Drug manufacturers submit the results of such trials to the
FDA as part of “new drug applications” (“NDAs”).
Through an
NDA, a manufacturer may also request FDA approval of use of the
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drug to treat a specific condition which is known as an
“indication.”
A manufacturer may only market and sell the drug
for an approved indication.
B.
Clinical studies and FDA approval of an adolescent
indication for Lexapro
Forest arranged for researchers to conduct four doubleblind, placebo-controlled studies on the efficacy of Celexa and
Lexapro in treating pediatric and adolescent depression.
The
first two studies, which examined the efficacy of Celexa, were
completed in 2001.
Of those studies, Celexa Study 18 (“MD-18”)
produced positive results whereas Celexa Study 94404 (“Lundbeck
Study”) produced negative results.
Forest submitted the results of the two Celexa studies to
the FDA in a supplemental NDA in 2002.
The FDA denied Forest’s
application for a pediatric indication for Celexa after finding
that the Lundbeck Study was a clearly negative study.
Two studies of Lexapro’s efficacy produced similar results
to the earlier Celexa studies.
Lexapro Study 15, which was
completed in 2004, produced negative results, whereas Lexapro
Study 32 was positive.
Celexa’s FDA-approved label was revised in February, 2005
to include a description of MD-18 and the Lundbeck Study.
Lexapro’s FDA-approved label was revised at the same time to
describe Lexapro’s negative pediatric study.
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Both labels added
an explicit statement that data were not sufficient at that time
to support an indication for use in pediatric patients.
In 2008, Forest submitted the results of those studies and
the earlier Celexa studies to the FDA in a supplemental NDA.
Based on 1) the fact that Celexa Study 18 and Lexapro Study 32
were both positive for efficacy in adolescents and 2) the
chemical similarities between Celexa and Lexapro, the FDA
permitted Forest to revise its Lexapro label in March, 2009 and
market Lexapro as safe and effective in treating MDD in
adolescents.
Forest never obtained FDA approval to market
Celexa for such use.
C.
United States’ qui tam complaint
In February, 2009, the United States Department of Justice
unsealed its qui tam complaint against Forest (“the government’s
qui tam complaint”) alleging off-label pediatric promotion and
concealment of the Lundbeck Study.
Following the unsealing of the government’s qui tam
complaint, two national class actions were filed: 1) New Mexico
UFCW Union’s and Employers’ Health and Welfare Trust Fund v.
Forest Labs, Inc., No. 09-cv-11524-NMG (filed Mar. 13, 2009)
(“March, 2009 RICO complaint), which alleged causes of action
under civil RICO and various state consumer protection statutes
on behalf of a putative class of TPPs and 2) Jaeckel, et al. v.
Forest Pharm., Inc., et al., No. 09-cv-11518-NMG (filed Mar. 20,
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2009) (“Jaeckel complaint”), which asserted consumer claims for
fraudulent concealment and misrepresentation, among others.
D.
Procedural history
1.
Painters action
In November, 2013, plaintiff Painters filed a complaint on
behalf of a putative nationwide TPP class.
It filed a first
amended complaint in February, 2014, asserting violations of
RICO (Counts I and II) and three Minnesota consumer protection
statutes (Counts III, IV and V) on behalf of a class of TPPs and
consumers.
2.
Allied Services/NM UFCW action
NM UFCW filed a complaint in this MDL in March, 2009,
asserting RICO, consumer fraud and unjust enrichment claims on
behalf of a nationwide class of TPPs.
a plaintiff later that month.
Allied Services joined as
Allied Services/NM UFCW
voluntarily dismissed the complaint in June, 2010.
In March, 2014, Allied Services/NM UFCW filed a new
complaint on behalf of a putative nationwide class for alleged
claims for violations of RICO (Counts I and II), Illinois and
New Mexico consumer protection statutes (Counts III and IV), the
consumer fraud laws of 46 other states (Count V) and unjust
enrichment (Count VI).
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Defendants moved to dismiss both actions in April, 2014.
After extensive briefing was completed in each case, the Court
held a joint hearing on the motions to dismiss in October, 2014.
II.
Defendants’ motions to dismiss Painters’ first amended
complaint
Plaintiff Painters alleges that defendants misrepresented
and concealed material information about the efficacy of Lexapro
in treating major depressive disorder (“MDD”) in pediatric
patients.
Their complaint asserts claims under civil RICO,
Minnesota Consumer Fraud Act (“MCFA”), Minnesota Unfair Trade
Practices Act (“MUTPA”) and Minnesota Deceptive Trade Practices
Act (“MDTPA”).
Forest moved to dismiss the FAC on the grounds
that plaintiff’s claims are barred by 1) the statute of
limitations and 2) failure to plead requisite elements of the
respective statutes.
A.
Legal standard
To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to “state a claim
to relief that is plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007).
The Court must accept all
factual allegations in the complaint as true and draw all
reasonable inferences in the plaintiff’s favor. Langadinos v.
Am. Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000).
The Court,
however, need not accept legal conclusions as true. Ashcroft v.
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Iqbal, 129 S. Ct. 1937, 1949 (2009).
Threadbare recitals of the
legal elements, supported by mere conclusory statements, do not
suffice to state a cause of action. Id.
Accordingly, a
complaint does not state a claim for relief where the well-pled
facts fail to warrant an inference of any more than the mere
possibility of misconduct. Id. at 1950.
B.
Statute of limitations
Defendants contend that all of plaintiff’s claims are timebarred by the statute of limitations (“SOL”).
1.
RICO claims
a.
Accrual date
The SOL for civil RICO claims is four years after the
plaintiff discovers or should have discovered the injury. See
Rotella v. Wood, 528 U.S. 549, 552-55 (2000).
The accrual of
the limitations period is computed from “the point of injury or
its reasonable discovery” and not from the “reasonable discovery
of a pattern [of racketeering activity].” Id. at 558; Lares
Grp., II v. Tobin, 221 F.3d 41, 43 (1st Cir. 2000).
Here, the parties dispute the nature of the plaintiff’s
injury.
Forest contends that the alleged injury is the payment
for ineffective off-label uses of the subject drugs and that it
was readily discoverable by early 2005, after a few articles
published in The New York Times discussed the negative result of
the Lundbeck Study and after Forest revised both the Celexa and
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Lexapro labels to describe the Lundbeck Study and the negative
Lexapro study.
Plaintiff, on the other hand, contends that its
injury is the payment for the drugs due to defendants’
fraudulent conduct and that it did not discover such fraud until
October, 2013.
Even under the definition of the injury as alleged by the
defendants, the Court declines to find, as a matter of law at
this stage of the litigation, that plaintiff should have
discovered its injury in 2005.
It recognizes, however, that
Painters, unlike an ordinary consumer, is a sophisticated TPP
with a fiduciary duty to its beneficiaries to monitor the
prescriptions for which it reimburses its insureds.
Although
the Court believes that the plaintiff was likely aware of the
labeling changes and therefore should have discovered it was
paying for potentially ineffective drugs as of 2005, defendants
have failed to cite any authority stating that TPPs should be
aware of all labeling changes for each of the products for which
their insureds are entitled to reimbursement.
Given that the running of the SOL is usually a jury
question, In re Lupron Mktg. & Sales Practices Litig., 295 F.
Supp. 2d 148, 183 (D. Mass. 2003), the Court will leave the
determination of whether plaintiff should have discovered its
injury as of 2005 to the finder of fact. See In re ScheringPlough Corp. Intron/Temodar Consumer Class Action, 2009 WL
-9-
2043604, at *22 (D.N.J. July 10, 2009) (finding it was “not at
all clear” that an FDA warning letter, public filings and
newspaper articles reporting a government investigation of offlabel marketing of the subject drugs provided sufficient
warnings to trigger the SOL at the motion to dismiss stage).
The Court concludes, instead, that the undisputed facts
support a finding that the SOL for plaintiff's RICO claims
accrued no later than March, 2009, when the national RICO class
action was filed following the unsealing of the government’s qui
tam complaint against Forest alleging off-label pediatric
promotion and concealment of the Lundbeck Study. See In re
Zyprexa Products Liab. Litig., 253 F.R.D. 69, 195-96 (E.D.N.Y
2008), rev'd on other grounds sub nom. UFCW Local 1776 v. Eli
Lilly & Co., 620 F.3d 121 (2d Cir. 2010) (barring RICO claims
beyond date of initial TPP lawsuit because “by then all
potential [TPPs]....should have been sufficiently advised of
alleged [injury]”); see also Benak ex rel. Alliance Premier
Growth Fund v. Alliance Capital Mgmt. L.P., 435 F.3d 396, 403
(3d Cir. 2006) (dismissing fraud claims as time-barred where
complaint “closely track[ed]” factual basis of a previously
filed complaint).
Painters filed its initial complaint in
November, 2013, more than four years after March, 2009.
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b.
Tolling of the SOL
Plaintiff nevertheless contends that its action was timely
because the filing of the Jaeckel consumer class action
complaint and the March, 2009 RICO complaint tolled the SOL
under American Pipe, which held that
the commencement of a class action suspends the
applicable statute of limitations as to all asserted
members of the class who would have been parties had
the suit been permitted to continue as a class action.
American Pipe & Construction Co. v. Utah, 414 U.S. 538, 554
(1974); see also Crown, Cork & Seal Co., Inc. v. Parker, 462
U.S. 345, 351 (1983) (expanding the doctrine to putative class
members).
Once the SOL has been tolled, it remains tolled for
all members of the putative class until class certification is
denied. Crown, Cork & Seal, 462 U.S. at 354.
i.
Tolling as a result of the Jaeckel
complaint
Plaintiff asserts that even though the Jaeckel complaint
did not allege a RICO cause of action, it tolled the SOL for the
Painters’ action until the Court denied class certification in
Jaeckel in February, 2013.
Relying on cases that cite Justice
Powell’s concurring opinion in Crown, Cork & Seal, 462 U.S. at
355, plaintiff contends that American Pipe tolling applies as
long as the claims “share a common factual basis and legal nexus
so that the defendant would rely on the same evidence...in his
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defense.” In re Enron Corp. Sec., 465 F. Supp. 2d 687, 718 (S.D.
Tex. 2006).
Defendants respond that the Jaeckel complaint could not
toll the plaintiff’s RICO claims because the Missouri consumer
protection claims asserted in Jaeckel are not the same as the
federal RICO claims asserted in the Painters’ FAC.
They contend
that American Pipe tolling applies “only for claims that are
identical to the claims asserted in the putative class action
complaint.” Shriners Hospitals for Children v. Qwest Commc'ns
Int'l Inc., 2007 WL 2801494, at *3 (D. Colo. Sept. 24, 2007).
There remains a split of authority on the issue of whether
American Pipe tolling is available for subsequent, non-identical
claims arising from the same factual basis. Compare In re
Neurontin Mktg. & Sales Practices Litig., 2011 WL 3852254, *48
(D. Mass. Aug. 31, 2011) aff'd, 712 F.3d 21 (1st Cir. 2013)
(finding American Pipe “inapplicable and the statute of
limitations was not tolled” for a claim made under the
California Unfair Competition Law because the initial class
complaint did not make such a claim) and In re Copper Antitrust
Litig., 436 F.3d 793-97 (7th Cir. 2006) (refusing to apply
tolling to putative class members’ federal antitrust claims
where prior class action asserted only state antitrust claims)
with Arivella v. Lucent Technologies, Inc., 623 F. Supp. 2d 164,
180 (D. Mass. 2009) (noting that American Pipe tolling applies
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to claims that are “sufficiently similar to the claims brought
by the failed class such that the class action effectively put
the defendant on notice of the plaintiff’s potential claims”)
and Cullen v. Margiotta, 811 F.2d 698, 720 (2d Cir. 1987)
(applying American Pipe tolling to RICO claims even though they
were not asserted in the initial class action in state court
because the actions shared the same factual basis).
While the First Circuit Court of Appeals has not directly
addressed the issue, this Court is persuaded by the reasoning of
Judge Meskill in his concurrence, in part, and dissent, in part,
in the Cullen decision:
The majority opinion unnecessarily, and I believe
unwisely, broadens American Pipe.
Unlike the setting
in American Pipe, the filing of the state action in
our case did not notify defendants of the “substantive
claims being brought against them” in the district
court.
Although both actions were based on the same
set of facts, the claims themselves asserted separate
and distinct grounds for recovery. The [first action]
was based on a state law theory of recovery seeking
compensatory damages [while the subsequent actions]
sought treble damages based on specific federal
statutes.
Id. at 734 (emphasis in the original).1
1
In In re Neurontin Mktg. & Sales Practices Litig., 712 F.3d 21
(1st Cir. 2013), the First Circuit Court of Appeals affirmed the
District Court’s opinion, in which Judge Saris refused to apply
American Pipe tolling to claims made under California Unfair
Competition Law because the initial class complaint did not
allege such claims. The First Circuit did not, however,
directly address the issue of tolling under American Pipe in its
opinion.
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Moreover, the Supreme Court has noted that the tolling
effect under American Pipe “depended heavily on the fact that
those filings involved exactly the same cause of action
subsequently asserted.” Johnson v. Ry. Exp. Agency, Inc., 421
U.S. 454, 467 (1975).
In Johnson, Justice Blackmun held that
the pendency of Title VII proceedings did not toll the SOL for
the assertion of an additional claim under 42 U.S.C. even though
both claims arose from the same factual circumstances. Id.
Because Jaeckel asserted Missouri consumer protection
claims, this Court rejects the applicability of Jaeckel to the
tolling of plaintiff’s federal RICO claims.
ii.
Tolling as a result of the March, 2009
RICO complaint
Plaintiff argues that the March, 2009 RICO complaint also
tolled the SOL for its action because both complaints asserted
the same claims.
Defendants respond that the complaint has no
tolling effect because it was voluntarily dismissed and
[t]he general rule...is that a voluntarily dismissed
complaint does not toll the statute of limitations...
because the law treats a voluntarily dismissed
complaint as if it never had been filed.
In re IndyMac Mortgage-Backed Sec. Litig., 718 F. Supp. 2d 495,
504 (S.D.N.Y. 2010).
The logic of that rule applies when the same party attempts
to use its previously filed cases to toll the SOL but the rule
does not address the tolling effect for unnamed class members
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under American Pipe.
Instead, the goal in American Pipe to
enable members of a putative class to rely on a pending action
for the protection of their interests
can be achieved only if the way in which the first
suit ends—denial of class certification by the judge,
abandonment by the plaintiff, or any other fashion—is
irrelevant.
Sawyer v. Atlas Heating & Sheet Metal Works, Inc., 642 F.3d 560,
562 (7th Cir. 2011).
The March, 2009 RICO complaint was voluntarily dismissed in
June, 2010.
Accordingly, the plaintiff’s federal RICO claims
(Counts I and II) were timely filed because the March, 2009 RICO
complaint tolled the limitations period for the filing of such
claims.
2.
Minnesota consumer fraud claims
Under state law, actions in which “liability [is] created
by statute” have a six-year statute of limitations. Minn. Stat.
§ 541.05.1(2).
A claim accrues on the date of the fraudulently-
induced purchase regardless of when the plaintiff discovers the
alleged fraud. Klehr v. A.O. Smith Corp., 875 F. Supp. 1342,
1352-53 (D. Minn. 1995).
Plaintiff’s state consumer fraud
claims therefore accrued when plaintiff reimbursed its insureds
for the fraudulently-induced purchases of Celexa and Lexapro.
Defendants assert that plaintiff’s Minnesota consumer fraud
claims are time-barred because, in light of publicly disclosed
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study results and the label change in 2005, Painters could not
have made any fraudulently-induced payments to its insureds for
off-label prescriptions of Celexa and Lexapro after 2005.
The
Court has, however, already determined that plaintiff was not
necessarily on notice of the alleged fraud until the filing of
the March, 2009 RICO complaint.
Accordingly, plaintiff’s Minnesota consumer fraud claims
(Counts III, IV and V) were timely filed, but only with respect
to the alleged, fraudulently-induced payments made between
November, 2007 (six years prior to the filing of its complaint)
and March, 2009.
C.
Substantive elements of the claims
Having determined that the Painters’ claims are not timebarred, the Court proceeds to analyze the plaintiff’s
substantive arguments.
1.
RICO claims
Plaintiff alleges that defendants violated two sections of
civil RICO, 18 U.S.C. § 1962(c) and (d), by employing the Celexa
and Lexapro Off-label Deceptive Promotion Enterprise (“Global
Enterprise”) and its four sub-enterprises to increase off-label
pediatric use of Celexa and Lexapro.
A violation of section
1962(c) of the RICO statute requires proof of “(1) conduct (2)
of an enterprise (3) through a pattern (4) of racketeering
activity.” Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496
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(1985).
Subsection (d) of the statute makes it unlawful to
conspire to violate subsection (c).
Forest contends that even if the RICO claims were timely
filed, the FAC fails adequately to plead the required elements
of a RICO claim, including 1) standing, 2) a RICO enterprise
whereby purported members share a common purpose and 3)
predicate acts constituting a pattern of racketeering.
a.
Standing
Defendants claim that the plaintiff does not have standing
because it failed to allege 1) injury to its business or
property and 2) causation of the injury by an alleged violation
of Section 1962. First Nationwide Bank v. Gelt Funding Corp., 27
F.3d 763, 767 (2d Cir. 1994).
Forest contends that the
plaintiff’s injury is purely speculative because the FAC fails
1) to allege facts to establish that plaintiff actually paid for
an ineffective prescription, 2) to identify cheaper alternative
medications and 3) to assert that plaintiff has ceased paying
for pediatric prescriptions of Celexa and Lexapro.
Plaintiff responds that it has pled injury adequately
because the FAC describes negative pediatric clinical study
results and, in the context of TPPs reimbursing for
fraudulently-promoted drugs, the issue of injury turns on
allegations that the drug was ineffective or that equally
effective cheaper alternatives were available.
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Painters cite to
In re Neurontin Mktg. & Sales Practices Litig., 712 F.3d 51, 59
(1st Cir.) cert. denied sub nom. Pfizer Inc. v. Kaiser Found.
Health Plan, Inc., 134 S. Ct. 786, 187 L. Ed. 2d 594 (2013),
which affirmed the district court’s holding that multiple
clinical trials demonstrating that the subject drug was no more
effective than placebo in treating off-label conditions at issue
was sufficient evidence of economic injury.
Moreover, plaintiff
alleges that it paid $24,739 in claims for pediatric use of
Celexa and/or Lexapro that would not have been incurred absent
Forest’s fraudulent conduct.
Even though the plaintiff has not identified any specific
plan members for whom Celexa or Lexapro was ineffective, viewing
all facts in favor of the plaintiff, Painters has sufficiently
pled injury and therefore has standing to raise its RICO claims.
b.
Association-in-fact
To successfully plead a RICO “association-in-fact”
enterprise, plaintiff must allege 1) a common purpose shared by
each member, 2) relationships among the members and 3) longevity
sufficient to permit the members to pursue the enterprise’s
purpose. Boyle v. United States, 556 U.S. 938, 946 (2009).
An
“association-in-fact enterprise is simply a continuing unit that
functions with a common purpose.” Id. at 948.
The FAC alleges the existence of the Global Enterprise as
well as four sub-enterprises: Publication Sub-Enterprise,
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Material Omissions Sub-Enterprise, Peer-Selling Sub-Enterprise,
and Direct-to-Prescriber Sub-Enterprise.
The alleged members of
the enterprises include, among others, 1) Forest, its
subsidiaries and employees, 2) Lundbeck, the licensor of Celexa
and Lexapro, 3) several prominent academic researchers and 4)
another pharmaceutical company that co-promoted Celexa.
Defendants contend that the FAC fails to allege association
among enterprise members and that they could not have had a
common purpose because plaintiff concedes that Forest did not
distribute the Lundbeck Study “beyond a small group of its
senior executives.”
Purported racketeers could not have shared
a common purpose of concealing information of which they were
ignorant. Cruz v. FXDirectDealer, LLC, 720 F.3d 115, 121 (2d
Cir. 2013) (affirming dismissal where complaint “affirmatively
allege[d] [members]...were unaware of...deceptive practices”).
Plaintiff disputes the assertion that the enterprises lacked a
common purpose and maintains that the complaint is “brimming
with allegations” that members of all enterprises conspired to
remain silent and suppressed the negative results in order
convey that Celexa was safe and effective for pediatric
treatment.
Although plaintiff’s allegation that only a small group of
Forest executives knew about the Lundbeck Study is at odds with
its assertion that members of all enterprises conspired to
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suppress the negative results, the Court nevertheless concludes
that plaintiff has sufficiently pled that at least some of the
enterprises shared the common purpose of promoting off-label
pediatric uses of Celexa and Lexapro while concealing their true
efficacy.
Should discovery reveal that only a small number of
executives at Forest were aware of the negative studies, the
Court will necessarily revisit the issue at a later stage of
this litigation.
c.
Predicate acts
Defendants argue that the plaintiff has failed to plead at
least two statutorily-defined predicate acts which are related
and “amount to or pose a threat of continued criminal activity”
required to bring a RICO claim. H.J. Inc. v. Nw. Bell Tel. Co.,
492 U.S. 229, 239 (1989).
They assert that the alleged
predicate acts of mail and wire fraud fail to meet the
heightened pleading standard of Fed. R. Civ. P. 9(b), including
the “who, what, where and when of the allegedly false or
fraudulent representations.” Alt. Sys. Concepts, Inc. v.
Synopsys, Inc., 374 F.3d 23, 29 (1st Cir. 2004).
The Court disagrees.
Although some of the allegations of
mail and wire fraud are vague, the FAC incorporates by reference
all allegations contained in the criminal information and plea
agreement entered into by Forest with the government, including
Forest’s admission that it communicated misleading information
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“via letters sent by [Forest]’s Professional Affairs Department
to medical practitioners.”
It also alleges that the predicate
acts were related to increased illegal off-label sales of Celexa
and Lexapro for pediatric use.
Plaintiff therefore sufficiently
pleads requirements with respect to RICO predicate acts to
survive a motion to dismiss.
Accordingly, defendants’ motion to dismiss plaintiff’s RICO
claims will be denied.
2.
Minnesota consumer protection statutes
Forest contends that plaintiff’s claims under the Minnesota
Consumer Fraud Act (“MCFA”) and the Minnesota Unfair Trade
Practices Act (“MUTPA”) should be dismissed because the FAC does
not allege a causal nexus between the alleged injury and any
deceptive conduct.
At the motion to dismiss stage, however,
plaintiff need only plead that the defendant “engaged in conduct
prohibited by the statutes and that the plaintiff was damaged
thereby.” Grp. Health Plan, Inc. v. Philip Morris Inc., 621
N.W.2d 2, 12 (Minn. 2001).
not required. Id.
An allegation of a causal nexus is
Here, plaintiff has alleged that defendant
made material misrepresentations and that it paid for
unnecessary prescriptions of Celexa and Lexapro for pediatric
use.
Painters’ Minnesota state law claims (Counts III and IV)
will therefore survive defendants’ motion to dismiss.
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Finally, defendants argue that Count V should be dismissed
because injunctive relief is the sole statutory remedy under the
Minnesota Deceptive Trade Practices Act (“MDTPA”) and the FAC
seeks only monetary damages.
Minn. Stat. § 325D.44.
does not dispute this argument.
Plaintiff
Accordingly, plaintiffs claim
under MDTPA (Count V) will be dismissed.
III. Motion to dismiss the Allied Services/NM UFCW complaint
Defendants seek to dismiss the Allied Services/NM UFCW
complaint on the grounds that 1) the claims are time-barred, 2)
plaintiffs fail adequately to allege standing or other basic
elements of a RICO claim and 3) the complaint fails adequately
to allege injury or causation under the applicable Illinois and
New Mexico state consumer protection laws.
Furthermore, the
defendants contend that the complaint fails to state a claim for
unjust enrichment because it does not allege that Forest
received a benefit at plaintiffs’ expense.
The arguments made
by defendants are essentially the same as those they made in the
Painters case.
A.
Statute of limitations
1.
RICO claims
Plaintiffs concede that their own March, 2009 RICO
complaint cannot serve to toll the RICO claims alleged in this
action.
They contend, however, that their RICO claims are not
time-barred because the SOL was tolled under American Pipe when
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the Jaeckel, Palumbo and Wilcox actions were filed and that it
remained tolled until class certification was denied in
February, 2013.
For the reasons stated in the discussion of Painters’
claims supra, the Court will dismiss the RICO claims as timebarred because none of the three prior actions relied upon for
tolling involves a federal RICO cause of action.
2.
Allied Services’ Illinois law claims
The SOL for claims under the Illinois Consumer Fraud Act
(“ICFA”) is three years. 815 Ill. Comp. Stat. Ann. § 505/10a(e).
The SOL for unjust enrichment claims is five years. 735 Ill.
Comp. Stat. Ann. 5/13-205.
A claim accrues when a plaintiff
“knows or should reasonably know of his injury and also should
know that it was wrongfully caused.” Hermitage Corp. v.
Contractors Adjustment Co., 651 N.E.2d 1132, 1139 (Ill. 1995).
The limitations period thus begins to run “when the fraud was
discovered or could have been discovered through due diligence.”
Super Pawl Jewelry & Loan, LLC v. Am. Envt. Energy, Inc., 2013
WL 1337303 at *5 (N.D. Ill. Mar. 29, 2013) (citation omitted).
Plaintiff’s claims are therefore untimely if it knew or should
have known of its alleged injury and that it was wrongfully
caused before March 13, 2011 with respect to the ICFA claim or
before March 13, 2009 with respect to the unjust enrichment
claim.
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Plaintiff indisputably had such knowledge no later than
March 23, 2009, when it joined as plaintiff in the NM UFCW
complaint that was filed on March 12, 2009.
Even though Allied
Services joined the complaint ten days after the key date for
its unjust enrichment claim, it had constructive notice of the
NM UFCW complaint. Hahn v. Cocal-Cola Co., 2004 U.S. Dist. LEXIS
14877, at *9 (N.D. Ill. July 30, 2004).
Accordingly, both state
law claims (Counts III and VI as to Allied Services) will be
dismissed as time-barred.
3.
NM UFCW’s New Mexico law
A four-year SOL applies to claims under the New Mexico
Unfair Practices Act (“NMUPA”) and to claims for unjust
enrichment.
Again, plaintiff’s filing of a complaint in March,
2009, which alleged the same claims, indicates that it knew of
its alleged injury.
NM UFCW’s state law claims (Counts IV and
VI as to NM UFCW) will therefore be dismissed time-barred.
4.
Consumer fraud claims in 46 additional
states
Plaintiffs’ complaint asserts claims under the consumer
fraud statutes of 46 additional states.
Defendants note that
this Court has already determined, in applying the choice-of-law
rules of New York and Missouri, that class members’ consumer
protection claims are governed by the laws of their home states.
In re Celexa & Lexapro Mktg. & Sales Practices Litig., 291
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F.R.D. 13, 16-18 (D. Mass. 2013).
Forest argues that the same
result follows from the application of Massachusetts’ choice-oflaw rules, which govern in this case because the complaint was
filed in the District of Massachusetts.
Plaintiffs’ individual
claims therefore are governed by the laws of Illinois and New
Mexico and they have no claim under the laws of the other 46
states.
The Court agrees.
Moreover, in light of the dismissal
of plaintiffs’ other claims, they will be unable to represent a
class of plaintiffs in their state law consumer fraud claims.
Count V of the plaintiffs’ complaint will therefore be
dismissed.
ORDER
For the foregoing reasons
1)
defendants’ motion to dismiss Painters’ amended
complaint (Civil Action No. 13-cv-13113, Docket No.
18) is as to Count V, ALLOWED, but is otherwise
DENIED; and
2)
defendants’ motion to dismiss Allied Services/NM UFCW
complaint (Civil Action No. 14-cv-10784, Docket No.
11) is ALLOWED.
So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated December 12, 2014
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