Winkelman et al v. Novartis AG et al
Filing
48
OPINION. Signed by Judge Claire C. Cecchi on 6/25/2018. (JB, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JULIE WINKELMANN, et al.,
Civil Action No.: 2: 14-cv-0291 8
Plaintiffs,
V.
OPINION
NOVARTIS A.G., et al.,
Defendants.
CECCHI, District Judge.
I.
INTRODUCTION
This matter comes before the Court on Defendants’ motion to dismiss Plainti
ffs’ first
amended complaint. (ECF No. 31). The motion is decided without oral argument pursua
nt to Rule
78(b) of the Federal Rules of Civil Procedure. For the reasons set forth below, Defend
ants’ motion
to dismiss is granted.
II.
BACKGROUND
In October 2013, Plaintiff Julie Winkelmann (“Winkelmann”) purchased Excedr
in
Migraine in Crescent City, California in order to relieve her migraines. (ECF
No. 23 (“FAC”)
¶ 20).
Around the time of purchase, Winkelmann “noticed that Excedrin Migraine and
Excedrin
Extra Strength seemed very similar but understood and believed that because Excedr
in Migraine
was sold at a higher price, it was a more effective product for migraine relief than the
less
expensive
Excedrin Extra Strength.” (Id.).
In November 2013, Plaintiff Michelle Crnz (“Cruz”) purchased Excedrin Migraine
“for
her migraine headaches and has purchased Excedrin Migraine several times over
the last ten
years.” (Id.
¶ 21).
In or about February or March 2013, Plaintiff Thamar S. Cortina (“Cortina,”
and collectively with Winkelmann and Cruz, “Plaintiffs”) purchased Excedrin Migrai
ne “to treat
her migraine headaches.” (Id.
¶ 22).
Cortina “believed that Excedrin Migraine was specifically
formulated and better for treating migraine headaches. She would not have purchased Excedrin
Migraine had she known that the product contained the identical active ingredients as the less
expensive Excedrin Extra Strength medicine.” (Id.).
Plaintiffs bring this lawsuit under the California Unfair Competition Law (the “UCL”),
which is part of California’s Business and Professions Code, on behalf of “[a]li persons who
purchased Excedrin Migraine at a higher price than Excedrin Extra Strength on or after August
1,
2005, in the State of California for personal, family, or household purposes.” (Id.
¶ 23).
Excedrin Extra Strength is an over-the-counter combination pain reliever that was first
approved in the 1 960s by the Food and Drug Administration (the “FDA”) for the temporary relief
of minor aches and pains due to headache. (Id.
¶J 10-11).
Each unit of Excedrin Extra Strength
contains active ingredients of 250 milligrams of acetaminophen, 250 milligrams of aspirin, and
65
milligrams of caffeine. (Id.
¶ 11).
The FDA approved Excedrin Migraine in January 1998 for the
temporary relief ofmild to moderate migraine headache pain with the same fonnulation and dosage
as Excedrin Extra Strength. (Id.
¶ 13).
“According to a Bristol-Myers press release on the
approval, Excedrin Migraine was given its own trademark and packaging ‘in order to provide
important information about appropriate use and when to consult a doctor’ but would be available
at the same suggested retail price as Excedrin Extra Strength.” (Id.). Moreover, as Plaintiffs note,
“[nJewspaper ads published in February 1998 emphasized the identical formulation of Excedrin
Migraine and Excedrin Extra Strength.” (Id.
¶ 14).
These ads stated:
Clinical research has just proven that the formula in Excedrin actually relieves
migraine pain. And because of the distinct nature of migraines, the FDA worked
with Excedrin to develop a different package with specific information for migraine
sufferers. So now next to Excedrin, there’s a new package—same medicine—
called Excedrin Migraine.
2
(Id.).
Briston-Myers Squibb, Co., Defendants’ predecessor in interest, sold both Excedrin Extra
Strength and Excedrin Migraine “at the same wholesale price and provided the same
suggested
retail price for both products.” (Id.
¶ 15-16).
Currently, Defendants sell 24-count packages of
Excedrin Migraine at a wholesale price of $3.60 and Excedrin Extra Strength at a wholes
ale price of
$3.20. (Id.
¶ 17).
Defendants sell 100-count packages of Excedrin Migraine at $10.25 wholesale and
Excedrin Extra Strength at $9.05 wholesale. (Id.). Defendants also sell 200-count packag
es of
Excedrin Migraine at $13.50 wholesale, compared to the $12.00 wholesale price for Excedr
in Extra
Strength. (Id.). These wholesale prices, Plaintiffs allege, are reflected in the higher retail
prices
paid by customers at stores like Walmart, Amazon.com, Rite-Aid, and Walgreens.
(Id.
¶ 18).
Amazon.com is home to the highest retail price differential alleged by Plaintiffs: a $1.05
variance
between the 300-count packages of Excedrin Extra Strength and Excedrin Migraine.
(Id.).
III.
LEGAL STANDARD
For a complaint to survive dismissal pursuant to Fed. R. Civ. P. 12(b)(6), it “must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on
its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Att. Corp. v. Twombly, 550
U.S. 544,
570 (2007)). In evaluating the sufficiency of a complaint, the Court must accept all well-p
leaded
factual allegations in the complaint as true and draw all reasonable inferences in favor of
the nonmoving party. See Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).
“Factual
allegations must be enough to raise a right to relief above the speculative level.” Twombly,
550
U.S. at 555. Furthermore, “[a] pleading that offers ‘labels and conclusions’
.
.
.
will not do. Nor
does a complaint suffice if it tenders ‘naked assertion[sJ’ devoid of ‘further factual enhanc
ement.”
Iqbal, 556 U.S. at 678 (citations omitted).
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IV.
DISCUSSION
Plaintiffs’ first amended complaint asserts one cause of action for violations of the UCL’
More specifically, Plaintiffs allege that:
Defendant’s acts and practices, as alleged in this complaint, constitute unfair
practices in that (1) they are unethical, unscrupulous, and substantially injurious to
consumers; (ii) any legitimate utility of Defendant’s conduct is outweighed by the
harm to consumers; and (iii) the injury is not one that consumers reasonably could
have avoided. In particular, it is fundamentally unfair to sell Excedrin Migraine at
a higher price than the pharmacologically identical product Excedrin Extra
Strength.
(FAC
¶ 31).
Plaintiffs further aver that “[a]s a result of Defendant’s conduct as alleged herein,
Plaintiffs and class members have lost money. Specifically, Plaintiffs and class membe
rs paid
more for Excedrin Migraine than the pharmacologically identical produc Excedr
t
in Extra
Strength.” (Id.
¶ 32).
The UCL prohibits “unfair competition{, which] mean{s] and include[s] any unlawf
ul,
unfair or fraudulent business act or practice and unfair, deceptive, untrue or
misleading
advertising[.j” Cal. Bus. & Prof. Code
‘unfair,’
.
.
.
§
17200. Because “[t]he statute does not define the term
articulating its parameters is a task that has fallen to the courts.” Boris v. Wal-M
art
Stores, Inc., 35 F. Supp. 3d 1163, 1170 (C.D. Cal. 2014), aff’d, 649 F. App’x 424 (9th
Cir. 2016).
In Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Company,
the
California Supreme Court held that “{a]n undefined standard of what is ‘unfair
’ fails to give
businesses adequate guidelines as to what conduct may be challenged and thus enjoine
d and may
sanction arbitrary or unpredictable decisions about what is fair or unfair.” 973 P.2d
527, 543 (Cal.
1999). Accordingly, the Court held that a claimant’s allegation of an unfair busine
ss practice
‘The parties agree that California law applies to this matter.
4
“must be tethered to a constitutional or statutory provision or a regulation
carrying out statutory
policy.” Id.; see also Gregory v. Albertson ‘s, Inc., 104 Cal. App. 4th 845,
853 (Ct. App. 2002).
In Boris v. Wal-Mart Stores, Inc., the Court applied the aforementioned “tether
ing test” to
a case similar to the instant matter. 35 F. $upp. 3d at 1171-72. More specifi
cally, the plaintiffs in
Boris alleged “that Equate Migraine’s price and red packaging deceived
them into believing that
it was more effective than the cheaper, green-packaged Equate ES” in violati
on of the UCL. Id.
at 1168, 1170. In evaluating the plaintiffs’ allegations, the Court held that:
Plaintiffs have not pointed to any specific constitutional, statutory, or
regulatory
provision that embodies a policy that Equate Migraine’s price and red
packaging
violate. And the Court is aware of none. Absent some legislative enactm
ent, price
setting is ordinarily lefi to the business judgment of merchants. Taken to
its logical
conclusion, Plaintiffs’ claim requires the judiciary to make pricing decisio
ns, such
as ruling that pharmacologically identical drugs must be the same price or
may have
only a limited price differential, or imposing liability for differential pricing
on a
necessarily unpredictable case-by-case basis.
Id. at 1171-72. Accordingly, the Court dismissed the plaintiffs’ claims for
failure to state a claim
upon which relief may be granted. See id. at 1172.
Plaintiffs aver in their opposition that their case is distinguishable from
Boris because:
What Plaintiffs here contend is that Novartis is engaging in unfair conduc
t by, in
effect, charging for FDA-mandated directions and instructions. The
different
packaging that allows Novartis to charge a higher price to migraine suffere
rs was
recommended and approved by the FDA to better communicate specifi
c directions
and warnings to migraine sufferers—not so Novartis could charge more
to those
suffering from migraines. It is fundamentally unfair for Novartis to seek
to profit
from these FDA-mandated warnings. It also runs counter to one
of the most
important goals of the FDA labeling regulations and approval process,
which are
designed to ensure that consumers of pharmaceuticals receive the approp
riate
directions and warnings in the most effective way possible. By charging
different
prices for packages with different instructions, Novartis is encouraging migrai
ne
sufferers to buy the cheaper package with the wrong directions and warnin
gs. They
will receive the very same ingredients by buying Excedrin Extra Streng
th, but will
not have the appropriate directions or warnings to refer to as needed.
Plaint ffs’
unfair practices claim therefore satisfies the tethering test, as it points
to a specific
governmental policy that Novartis ‘s conduct is undermining—namely,
the FDA ‘s
.
5
.
.
policy of using separate packaging to most effectively communicate specfIc
instructions to migraine users.
(ECF No. 38 at 7-8) (emphasis added). Nonetheless, Plaintiffs’ first amended compl
aint states
that:
Defendant’s acts and practices, as alleged in this complaint, constitute unfair
practices in that (i) they are unethical, unscrupulous, and substantially injurious to
consumers; (ii) any legitimate utility of Defendant’s conduct is outweighed by the
harm to consumers; and (iii) the injury is not one that consumers reasonably could
have avoided. In particular, it is fundamentally unfair to sell Excedrin Migraine
at
a higher price than the pharmacologically identical product Excedrin Extra
Strength.
(FAC ¶ 31). Plaintiffs’ first amended complaint does not set forth facts in support of the
argument
presented in Plaintiffs’ opposition. Plaintiffs do not allege that Defendants charge a
premium for
including additional directions on the packaging of Excedrin Migraine. Moreover,
Plaintiffs do
not contend that they paid more for Excedrin Migraine because its packaging includ
ed additional
directions. Rather, Plaintiffs aver that they “understood and believed that becaus
e Excedrin
Migraine was sold at a higher price, it was a more effective product for migraine relief
than the
less expensive Excedrin Extra Strength.” (Id.
¶ 20;
see also id. ¶22 (“Cortina believed that
Excedrin Migraine was specifically formulated and better for treating migraine headac
hes.”)).
Additionally, no plaintiff maintains that he or she was harmed by purchasing the less
expensive
Excedrin Extra Strength, without additional directions on its packaging. To the contrar
y, Plaintiffs
contend that “Plaintiffs and class members paid more for Excedrin Migrai
ne than the
pharmacologically identical product Excedrin Extra Strength,” (id.
¶ 32)
(emphasis added), and
“would not have purchased Excedrin Migraine had [they] known that the product contain
ed the
identical active ingredients as the less expensive Excedrin Extra Strength medicine.”
(Id.
¶ 22).
“To decide a motion to dismiss, courts generally consider only the allegations contain
ed in
the complaint, exhibits attached to the complaint and matters of public record.”
Pension Ben.
6
Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993). Because Plaintiffs’
first amended complaint does not set forth facts in support of the argument presented in Plaintiffs’
opposition, the Court finds that Plaintiffs have not pointed to any specific constitutional, statutory,
or regulatory provision that embodies a policy that Excedrin Migraine’s price violates. See Boris,
35 F. Supp. 3d at 1171-72. Accordingly, the Court finds that applying the “tethering test,”
Plaintiffs have failed to state a claim upon which relief may be granted.
Nonetheless, Plaintiffs contend that even if their allegations fail under the “tethering test,”
Plaintiffs’ first amended complaint states a claim under California’s “balancing test.” (ECF No.
38 at 5-6). Under California’s “balancing test,” a “business practice is unfair within the meaning
of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or
unscrupulous and causes injury to consumers which outweighs its benefits.” McKell v. Wash.
Mut., Inc., 142 Cal. App. 4th 1457, 1473 (Ct. App. 2006).
Here, Plaintiffs maintain in their opposition that:
Here, Plaintiffs have alleged that Novartis unethically and unscrupulously uses
FDA-mandated migraine instructions to extract additional profits from those
consumers suffering from migraines. Consumers are harmed because they either
pay more for Excedrin Migraine than they would pay for the identical product
without the FDA-mandated migraine instructions and warnings, or they pay less for
Excedrin Extra Strength without the migraine-specific information that the FDA
seeks to communicate to consumers. And while there is certainly a benefit to
consumers from different packaging—as the FDA recognized when it
recommended the different packaging so that specific instructions be conveyed to
migraine suffers—there is no benefit from Novartis’s conduct of charging more for
that information.
(ECF No. 38 at 9). As explained above, however, Plaintiffs’ first amended complaint does not set
forth facts in support of Plaintiffs’ argument. Plaintiffs do not contend that the decision to charge
a premium for Excedrin Migraine was driven by the inclusion of additional instructions, or that
Plaintiffs purchased Excedrin Migraine because its packaging included additional instructions.
7
Nor does any plaintiff maintain that he or she suffered harm from purchasing Excedrin Extra
Strength, the cheaper product, without additional instructions. Rather, Plaintiffs’ first amended
complaint alleges that the injury to consumers was “pa[ying] more for Excedrin Migraine than the
pharmacologically identical product Excedrin Extra Strength.” (FAC ¶ 32). Because pricing alone
has not been found to violate the “balancing test” under California law, the Court finds that there
is “no unfairness to be weighed.” See Ktrnert v. Mission Fin. Servs. Corp., 110 Cal. App. 4th 242,
265 (Ct. App. 2003). Accordingly, the Court finds that under either the “tethering test” or the
“balancing test,” Plaintiffs fail to state a claim upon which relief may be granted.2
V.
CONCLUSION
F or the foregoing reasons, Defendants’ motion to dismiss is granted. To the extent the
pleading deficiencies identified by this Court can be cured by way of amendment, Plaintiffs are
hereby granted thirty (30) days to file an amended pleading. An appropriate Order accompanies
this Opinion.
DATED:
(
CLAIRE C. CECCHI, U.S.D.J.
2
Because the Court finds that Plaintiffs fail to state a claim upon which relief may be granted, the
Court need not address Defendants’ argument that Plaintiffs’ claims are barred by the UCL’s safe
harbor provision. (ECF No. 31 at 8). Moreover, to the extent Defendants argue that any viable
state law claim imposing liability on Defendants would be preempted by federal law, and is barred
by the UCL’s safe harbor provision, (id. at 2-1 1), Plaintiffs clarified in their opposition that
“Plaintiffs are not making any such claim.” (ECF No. 38 at 11).
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