Rheinfrank et al v. Abbott Laboratories Inc. et al
Filing
31
ORDER denying 12 defendant's partial Motion to Dismiss. signed by Chief Judge Susan J. Dlott. (wam1)
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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
Pamela Rheinfrank, et al.,
Case No. 1:13-cv-144
Plaintiffs,
Chief Judge Susan J. Dlott
ORDER DENYING DEFENDANTS'
PARTIAL MOTION TO DISMISS
v.
Abbot Laboratories
AND
Abbvie Inc.,
Defendants.
This matter is before the Court on Defendants' Motion to Dismiss Plaintiffs' negligent
misrepresentation and fraud claims brought under Ohio common law. Doc. 12. For the reasons
that follow, the Court DENIES Defendants' Motion.
I.
BACKGROUND
Plaintiff Pamela Rheinfrank claims to have taken Depakote, an anti-seizure medication
with an active ingredient called valproate for many years including while pregnant with her
daughter, Maria Durham. On July 25, 2004, Ms. Rheinfrank gave birth to Ms. Durham, who was
born with multiple severe birth defects and diagnosed with fetal valproate syndrome. Ms.
Durham suffers from permanent physical impairment and requires special education.
Abbot Laboratories began producing Depakote in 1978. 1 Plaintiffs allege that Depakote,
and its active ingredient valproate, caused the birth defects which afflict Ms. Durham. They
allege that scientific research as early as 1980 showed the teratogenicity ofDepakote, and that
1
Abbot split into Abbot Laboratories and Abbvie, Inc. in 2013.
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more research since then has confirmed these dangers. Plaintiffs claim that despite knowing these
risks (or in negligent disregard to them), Defendants failed to warn consumers of the teratogenic
effects of Depakote, placed false and misleading information on product labels and advertising
material, and denied a cause and effect relationship between Depakote and teratogenic births.
In their Amended Complaint, Plaintiffs plead ten causes of action; the only one under
discussion here is the fifth, alleging common law negligent misrepresentation and fraud. In their
motion to dismiss the fifth cause of action, Defendants argue that (1) Plaintiffs failed to plead
separate, independent claims for fraud and negligent misrepresentation, (2) negligent
misrepresentation must be pled with particularity perF ed. R. Civ. P. 9(b) and Plaintiffs have failed
to do so; and (3) Plaintiffs' claim for fraud fails to meet the Rule 9(b) heightened pleading
standard. Plaintiffs respond that negligent misrepresentation is subject to Rule 8(a) notice
pleading, that both claims are adequately pled under either Rule 8(a) or Rule 9(b), and that if they
did not properly plead these claims then the Court should grant them leave to amend the complaint.
II. LEGAL STANDARD
To survive a motion to dismiss, a complaint must provide fair notice of the claim and must
make factual allegations suggesting that the plaintiff is entitled to relief under those claims. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47
(1957)). Most claims are pled under the lenient Rule 8(a) notice pleading standard. Claims of
fraud, however, must be pled with particularity underFed. R. Civ. P. 9(b) and must "( 1) ... specify
the allegedly fraudulent statements; (2) ... identify the speaker; (3) ... plead when and where the
statements were made; and (4) ... explain what made the statements fraudulent." Republic Bank
& Trust Co. v. Bear Stearns & Co., Inc., 683 F.3d 239, 247 (6th Cir. 2012). While reviewing a
motion to dismiss, a court "must construe the complaint in the light most favorable to the plaintiff
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and treat all well-pleaded allegations contained therein as true." In re Porsche Cars N Am., Inc.,
880 F. Supp. 2d 801, 814 (S.D. Ohio 2012) (internal citations omitted).
III. ANALYSIS
A.
Fraud Claim Is Independent of Negligent Misrepresentation Claim.
The first question presented by Defendants' motion to dismiss the fifth claim for relief is
whether Plaintiffs sufficiently made separate claims for negligent misrepresentation and fraud.
Defendants argue that Plaintiffs have failed to do so and thus would have to plead both claims
under the heightened Rule 9(b) standard: "When a party brings both fraud and negligent
misrepresentation claims but fails to plead an independent basis ofliability for each of the claims,
courts will apply Rule 9(b)'s standard to both claims." In re Nat'! Century Fin. Enters., Inc. Inv.
Litig., 504 F. Supp. 2d 287, 322 (S.D. Ohio 2007) (citing cases from other circuits). But
"[ s]tatements which do not rise to the level of fraud may nonetheless constitute actionable
misrepresentations if they are based in good faith yet still coupled with negligence," Barr v. Lauer,
No. 87514, 2007 WL 117502, at *3 (Ohio Ct. App. Jan. 18, 2007) (internal quotations omitted).
See also Nat'! Century, F. Supp. 2d at 322 (finding a negligent misrepresentation claim
independent of fraud claim where plaintiff alleged a duty and a failure of ordinary care in
executing that duty).
The standard for negligent misrepresentation was set by the Ohio Supreme Court:
A person who, in the course of his business, supplies false information for the
guidance of others in their business transactions, is subject to liability for pecuniary
loss caused to them by their justifiable reliance upon the information, if he fails to
exercise reasonable care or competence in obtaining or communicating the
information.
Gutter v. Dow Jones, Inc., 490 N.E.2d 898, 900, 22 Ohio St. 3d 286, 288 (Ohio 1986). See also
Delman v. City ofCleveland Heights, 544 N.E.2d 835, 838, 41 Ohio St. 3d 1, 4 (Ohio 1989). In
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contrast,
[t]o prove a claim for common law fraud under Ohio law, a plaintiff must prove: (a)
a representation or, when there is a duty to disclose, concealment of a fact, (b)
which is material to the transaction at hand, (c) made falsely, with knowledge of
falsity, or with such utter disregard and recklessness as to whether it is true or false
that knowledge may be inferred, (d) with the intent of misleading another into
relying upon it, (e) justifiable reliance upon the representation or concealment, and
(f) a resulting injury proximately caused by the reliance.
Glassner v. R.J. Reynolds Tobacco Co., 223 F.3d 343, 352 (6th Cir. 2000) (citing Burr v. Bd. of
Cnty. Comm 'rs, 491 N.E.2d 1101, 1105, 23 Ohio St. 69, 72 (Ohio 1986) (emphasis added)).
Thus, a claim for fraud can be based on either a misrepresentation or, along with an alleged duty to
disclose, concealment, whereas a claim for negligent misrepresentation requires an allegation that
the defendant affirmatively supplied false information. Andersons, Inc. v. Consol, Inc., 348 F.3d
496, 506 (6th Cir. 2003).
Plaintiffs have pled elements of both fraud and negligent misrepresentation. Although
both claims rest on some of the same facts, because Plaintiffs pled both the affirmative inclusion of
false information (negligent misrepresentation), and the fraudulent concealment of other
information despite an alleged duty (fraud), they "sufficiently set forth a basis for [negligent
misrepresentation] liability that is independent of the fraud claim." Nat'! Century, 504 F. Supp. 2d
at 323. Specifically, Plaintiffs allege that Defendants knew valproate was or could be a teratogen
but denied a causal relationship between Depakote and birth defects and represented that their
product was as safe as or safer than other prescription anti-seizure medications available. Thus,
Plaintiffs adequately pled an independent basis of liability for the negligent misrepresentation
claim based on the affirmative inclusion of false information. Separately, Plaintiffs allege that
Defendants concealed material warnings. In particular, Plaintiffs claim that Defendants
concealed the recommendation that pregnant women avoid high doses of val pro ate, and the
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increased risk of cognitive deficits caused by the use of Depakote. The allegations of
concealment, together with the allegation that Defendants had a duty to disclose, constitute an
independent basis for liability for the claim of fraud. For these reasons, the Amended Complaint
sets forth a claim of negligent misrepresentation that is independent of the fraud claim.
B.
Negligent Misrepresentation Claim Is Well-Pled.
1.
Negligent misrepresentation should be pled under Rule 8(a).
Since the Amended Complaint sets forth two independent claims under the fifth cause of
action, the next question is whether, under substantive state law, the negligent misrepresentation
claim should be analyzed under the notice pleading standard of Fed. R. Civ. P. 8(a) or under the
heightened, fraud-based standard of Fed. R. Civ. P. 9(b). Defendants argue that under relevant
precedent, negligent misrepresentation claims must be pled under the fraud standard, whereas
Plaintiffs cite a contrary case holding to the more lenient Rule 8(a) standard.
Defendants rely on Mulbarger v. Royal Alliance Assocs., Inc., No. C-2-96-0739, 1999 WL
33432317, at *2 (S.D. Ohio Dec. 22, 1999), aff'd, 10 F. App'x 333 (6th Cir. 2001). InMulbarger
the court stated without discussion that "[t]he standards ofRule 9(b) apply to [state law] claims of
negligent misrepresentation," relying upon cases from the Ninth2 and the Second3 Circuits which
applied state law. !d. The Mulbarger decision contains no examination of Ohio law. The
Defendants also rely on In re SmarTalk Teleservices, Inc. Securities Litigation for its proposition
that Rule 9(b) applies to state law claims of negligent misrepresentation. 124 F. Supp. 2d 487,
502 (S.D. Ohio 2000). However, that case explicitly states that "Massachusetts law applies to
Eder v. Allstate Ins. Co., 60 F.3d 833 (9th Cir. 1995) (applying California law).
Harsco Corp. v. Segui, 91 F.3d 337, 347 (2d Cir. 1996) (citing Shields v. Citytrust Bancorp.,
Inc., 25 F.3d 1124, 1128 (2d Cir. 1994) (applying New York state law to claim of negligent
misrepresentation)).
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Defendants' negligent misrepresentation claims." !d. Thus, these precedents are not particularly
persuasive because the cited authorities are not binding on this Court and do not apply Ohio law.
A later, more useful Sixth Circuit case held that "[w]hether a state-law claim sounds in
fraud, and so triggers Rule 9(b)' s heightened standard, is a matter of substantive state law, on
which we must defer to the state courts." Republic Bank & Trust Co. v. Bear Stearns & Co., 683
F.3d 239, 247 (6th Cir. 2012) (internal citations omitted) (discussing pleading standards for
negligent misrepresentation claim based upon Kentucky law). The question under Republic Bank
thus becomes whether, under substantive Ohio law, negligent misrepresentation sounds in fraud.
A review of Ohio case law shows that negligent misrepresentation claims do not sound in
fraud and are treated separately. In National Century, the U.S. District Court for the Southern
District of Ohio found that the application ofRule 8(a) to Ohio negligent misrepresentation claims
is "supported by Ohio case law making clear that fraud and negligent misrepresentation are
separate and distinct .... " 504 F. Supp. 2d at 323 (citing Dejaiffe v. KeyBank USA Nat 'lAss 'n,
No. L05-1191, 2006 WL 1580053, at *7 (Ohio Ct. App. June 9, 2006) ("reversing district court for
failing 'to recognize and consider negligent misrepresentation as a separate claim"'); Carpenter v.
Scherer-Mountainlns. Agency, 733 N.E.2d 1196, 1204, 135 Ohio App. 3d 316,328 (Ohio Ct.
App. 1999) ("negligent misrepresentation a 'distinct cause of action"'); and Ferro Corp. v. Blaw
Knox Food & Chem. Equip. Co., 700 N.E.2d 94, 98, 121 Ohio App. 3d 434,440-41 (Ohio Ct. App.
1997) ("holding that fraud and negligent misrepresentation are 'separate and distinct tort claims"')
(parenthetical quotations from Nat'l Century, F. Supp. 2d at 323)).
Further, in Barr v. Lauer, an Ohio appellate court applied Ohio R. Civ. P. 9(B) in detail to
a claim of fraud, but did not apply the heightened pleading standard to claims of negligent
misrepresentation, breach of fiduciary duty, breach of contract, and negligence, even though those
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claims all were based on alleged misrepresentations. 2007 WL 117502, at *3-*4 (applying Ohio
R. Civ. P. 9(B) to and dismissing a claim for fraud while allowing a negligent misrepresentation
claim to survive when plaintiff simply pled each element of the action). Because whether a
state-law claim sounds in fraud is a matter of state law, and because Ohio courts distinguish
negligent misrepresentation claims from fraud claims, the Court applies Rule 8(a) to Plaintiffs'
claim for negligent misrepresentation and Rule 9(b) to Plaintiffs' fraud claim.
2.
The negligent misrepresentation claim was well-pled.
As discussed in Section liLA, Plaintiffs allege that Defendants affirmatively supplied false
information to Plaintiffs when they denied that the relationship between Depakote and birth
defects was causal and represented that Depakote was as safe as or safer than other prescription
anti-seizure medication when, in fact, they knew or should have known there was a causal
relationship. Plaintiffs also pled economic loss and justifiable reliance on the false information.
Construed in the light most favorable to the Plaintiffs, these allegations fulfill the elements
ofthe cause of action and "plausibly give rise to an entitlement of relief." Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009). The Court finds the claim of negligent misrepresentation sufficiently pled.
C.
The Fraud Claim Satisfies Rule 9(b) Standards.
1.
Requirements for pleading fraud.
Fraud claims must be plead with particularity under Fed. R. Civ. P. 9(b ), which "requires a
plaintiff: (1) to specify the allegedly fraudulent statements; (2) to identify the speaker; (3) to plead
when and where the statements were made; and (4) to explain what made the statements
fraudulent." Reusser v. Saxon Mortgage Servs., Inc., No. 2:12-CV-00087, 2012 WL 4108007, at
*4 (S.D. Ohio Sept. 19, 2012) (quoting Republic Bank, 683 F.3d at 246-47). Scienter may be
alleged generally, but there must be factual allegations to make scienter plausible. Id.
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Despite the heightened pleading standard for allegations of fraud, courts must still
"consider the policy favoring simplicity in pleading, codified in the short and plain statement of
the claim requirement ofFederal Rule of Civil Procedure 8," Sanderson v. HCA-The Healthcare
Co., 447 F.3d 873, 876 (6th Cir. 2006), as well as the overall "purpose ofRule 9(b)'s particularity
requirement [to provide] fair notice to the defendant so as to allow him to prepare an informed
pleading responsive to the specific allegations of fraud." GMAC Real Estate.LLC v. Prindle Real
Estate, Inc., No. 2:07-CV-1017, 2007 WL 4570578, at *1 (S.D. Ohio Dec. 24, 2007) (quoting
Advocacy Org.for Parents & Providers v. Auto Club Ins. Ass 'n., 176 F.3d 315,322 (6th Cir. 1999)
(internal quotations omitted)). Furthermore, "[t]he rule ... requires only that the 'circumstances'
of the fraud be pled with particularity, not the evidence of the case." Michaels Bldg. Co. v.
Ameritrust Co., N.A., 848 F.2d 674, 680 n.9 (6th Cir. 1988) (citing Roger v. Lehman Bros. Kuhn
Loeb, Inc., 604 F. Supp. 222, 225 (S.D. Ohio 1984) (rejecting defendant's claim that plaintiffs
needed to supply the names ofthird parties in the complaint). Indeed, Rule 9(b)'s requirements
may be relaxed when discovery has been limited and needed information is in the hands of the
opposing party. Allen v. Andersen Windows, Inc., No. 2:12-CV-347, 2012 WL 6644387, at *3
(S.D. Ohio Dec. 20, 2012) ("Rule 9(b) maybe relaxed when there has been a lack of discovery and
the information needed for a plaintiff to achieve particularity is held exclusively by the opposing
party ... [Rule] 9(b) does not require a plaintiff to be omniscient.").
2.
Plaintiffs' claim for fraud satisfies Rule 9(b) standards.
Courts in the Southern District of Ohio addressing the adequacy of pleading fraud under
Rule 9(b) have found that describing the false nature of a product label is sufficient to satisfy the
"where" or "place" requirement of the standard. In Delahunt v. Cytodyne Technologies, the
plaintiff"alleged the manner in which the product label was misleading or deceptive[,] ...
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particular[ly] ... that the label affixed to [the product] ... failed to disclose the true dangers
associated with taking [the product]." 241 F. Supp. 2d 827, 841 (S.D. Ohio 2003). See also
Rikos v. Procter & Gamble Co., 782 F. Supp. 2d 522, 536-37 (S.D. Ohio 2011) (denying a motion
to dismiss on Rule 9(b) grounds a claim for fraud where plaintiff alleged fraudulent statements on
a product label, satisfying the location requirement ofRule 9(b)); GMAC Real Estate LLC, 2007
WL 4570578, at *2 (holding that an allegation of a fraud perpetrated on specified documents meets
the "where" requirement of Rule 9(b)). Furthermore, courts in this district have found that an
allegation of living in a particular jurisdiction has satisfied the "where" element ofRule 9(b).
Kuvedina, LLC v. Cognizant Tech. Solutions, No. 2:12-CV-342, 2013 WL 2243744, at *8 (S.D.
Ohio May 21, 2013) (denying motion to dismiss a fraud claim that alleged that "the
misrepresentation occurred in Mason, Ohio") (internal citations omitted).
As in the above cases, the Amended Complaint alleges that fraudulent misrepresentations
were on 2003-2004 Depakote product labels (and advertising materials). Though Plaintiffs did
not quote from or attach any Depakote labels, Plaintiffs are not required to present evidence,
Michaels Building Co., NA., 848 F.2d at 680 n.9, and the Amended Complaint provides sufficient
notice of the "place" where the allegedly fraudulent statements were made. The Amended
Complaint also alleges that the Plaintiffs live in Warren County. See Kuvedina, 2013 WL
2243744, at *8. Thus, the Amended Complaint puts Defendants on notice about the location of
the alleged fraud and negligent misrepresentations.
The Amended Complaint also notes with particularity the existence of the alleged
fraudulent statements and what made them fraudulent-that Defendants knew (or should have
known) the true danger of Depakote and did not include that information on the product label.
Though Defendants fault Plaintiffs for failing to include the names and dates of the studies
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referenced in the Amended Complaint, that information is not required. Michaels Bldg. Co.,
NA., 848 F.2d at 680 n.9 (holding that pleading evidence is not required for complaints).
With regard to the "when" element, a Southern District of Ohio court held that allegations
"meet the heightened Rule 9(b) standard of pleading" when they "include the approximate
time ... of the statements .... " Kuvedina, 2013 WL 2243744, at *8 (holding that "on or about
March 2010" satisfied the approximate time requirement). Plaintiff was specific with regard to
the time period during which she took the drug and when the product labels contained allegedly
fraudulent and misleading information. Providing dates for each time the doctor prescribed, and
Plaintiffbought and ingested, the drug is unnecessary.
Finally, the Amended Complaint makes factual allegations of the Defendants' mental state,
creating a plausible allegation of scienter. Specifically, Plaintiffs allege a financial motive to
conceal or negligently misrepresent safety information. In total, Plaintiffs' pleading for fraud is
sufficient to survive the required Rule 9(b) analysis.
IV. CONCLUSION
For the foregoing reasons, the Court DENIES Defendants' Partial Motion to Dismiss.
IT IS SO ORDERED.
Chief Judge Susan J
United States Distric
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ourt
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