MEIJER, INC. et al v. RECKITT BENCKISER, INC. et al
MEMORANDUM AND/OR OPINION RE: MOTION TO DISMISS THE DIRECT PURCHASERS' COMPLAINT & THE MOTION TO DISMISS THE END PAYORS' COMPLAINT. SIGNED BY HONORABLE MITCHELL S. GOLDBERG ON 12/3/2014. 12/3/2014 ENTERED AND COPIES MAILED AND E-MAILED. (SEE PAPER NO. 97 IN 13-MD-2445).(tjd)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: SUBOXONE (BUPRENORPHINE
MDL NO. 2445
HYDROCHLORIDE AND NALOXONE)
THIS DOCUMENT APPLIES TO:
December 3, 2014
This multidistrict litigation raises the following question: can a pharmaceutical company
marketing brand-name prescription drugs be subject to antitrust liability for engaging in what has
been referred to as a “product hopping” scheme? Plaintiffs urge that the answer to this question
is “yes,” and allege that as the period of exclusivity on the brand-name drug, Suboxone, expired
and generic versions of that drug were to become available, Reckitt Benckiser, Inc. effectuated
inconsequential changes to the Suboxone dosage form to prevent competition from generic
More specifically, Plaintiffs, the Direct Purchasers of Suboxone (“Direct
Purchasers”) and the End Payors of Suboxone (“End Payors”) claim that Reckitt and its affiliates
(“Reckitt”) switched from sublingual Suboxone tablets to a sublingual Suboxone film for the
purpose of stymying generic competition. This switch was allegedly accompanied by Reckitt
falsely disparaging the tablet through fabricated safety concerns and ultimately removing
Suboxone tablets from the market just as generic Suboxone tablets were able to begin competing.
Reckitt is also alleged to have manipulated FDA regulations to delay the entry of generic
Suboxone onto the market, thereby unlawfully maintaining a monopoly in violation of § 2 of the
Sherman Act and state law. According to Plaintiffs, Reckitt’s conduct negatively affected
competition and resulted in ongoing overpayments by consumers.
Before me is Reckitt’s motion to dismiss which essentially argues that Plaintiffs’
complaint describes nothing more than new product development and marketing. Reckitt is
correct that the development and marketing of new products is typically viewed as
procompetitive. However, due to market characteristics unique to the pharmaceutical industry, I
conclude that some of Plaintiffs’ claims do plausibly allege antitrust violations and should
survive Defendants’ motions to dismiss. This opinion explains the bases for my ruling.
FACTUAL AND PROCEDURAL BACKGROUND
The facts alleged by Plaintiffs are as follows:1 Suboxone (Buprenorphine Naloxone or
“BPN/NLX”) is a prescription drug used for the maintenance treatment of opioid dependence. It
is the only pharmaceutical on the market that provides maintenance treatment for patients
suffering from opioid addiction that can also be prescribed in an office setting for the patient’s
home use. All other opioid addiction maintenance treatments, such as methadone, can only be
dispensed at a clinic. Suboxone has been approved for home use because it is co-formulated to
help prevent abuse, containing both: (1) buprenorphine, an opioid which treats the withdrawal
symptoms; and (2) naloxone, an opioid antagonist, which causes the immediate onset of
withdrawal symptoms if the product is inappropriately melted and injected. Today, Suboxone
The Direct Purchasers’ and the End Payors’ complaints contain almost identical allegations. To
avoid confusion, the facts recited herein will be derived from the Direct Purchasers’ consolidated
amended complaint. Where the allegations in the complaints differ, I will distinguish
accordingly. In reviewing Defendants’ motion to dismiss, I assume that all facts found in the
consolidated amended complaints are true, and to the extent any facts from outside the amended
complaints are recited, they are referenced for informational purposes only. See Ethypharm S.A.
France v. Abbott Labs., 707 F.3d 223, 225 n.1 (3d Cir. 2013).
has annual sales of over one billion dollars and accounts for 20% of Reckitt’s profits. (DP
Compl. ¶¶ 5, 74-77.)
Under the Federal Food, Drug and Cosmetic Act (“FDCA”), 21 U.S.C. §§ 301, et seq., a
manufacturer that creates a new drug must obtain the approval of the Food and Drug
Administration (“FDA”) to sell the drug by filing a New Drug Application (“NDA”). Under the
Drug Price Competition and Patent Term Restoration Act, Pub. L. No. 98-417 (1984), commonly
known as the Hatch-Waxman Act, certain pioneer drugs can gain periods of exclusivity.
However, Hatch-Waxman also simplified the process by which generic manufacturers can
compete with brand-name drugs on the market through the filing of an Abbreviated New Drug
For example, Hatch-Waxman eliminated the need for generic
manufacturers seeking ANDA approval to duplicate clinical studies that had already been
performed by a bioequivalent brand-name drug manufacturer. (Id. at ¶¶ 38-42.)
In order for a drug to be deemed bioequivalent, the generic product must be shown to
deliver the same amount of active ingredient into a patient’s blood stream for the same amount of
time as the brand-name drug. ANDA filers demonstrating bioequivalence generally seek to have
their product deemed “AB-rated” to the brand-name drug. This rating means that in addition to
being bioequivalent, the two drugs are also pharmaceutically equivalent—which includes such
considerations as having the same active ingredient, the same strength, the same route of
administration and the same dosage form. A pharmacy may not substitute a generic drug for a
brand-name drug unless the generic is AB-rated. (Id. at ¶¶ 42-44.)
Competition from low cost AB-rated generic drugs saves consumers billions of dollars a
year. When an AB-rated generic drug enters the market, the brand-name company often suffers
a rapid, steep decline in sales—on average 80% within the first year.
competition enables direct and indirect purchasers to obtain both the generic drugs and the
brand-name drugs at substantially lower prices. (Id. at ¶¶ 9, 51, 55.)
The FDA approved Reckitt’s NDA for Suboxone tablets in 2002. Although Reckitt did
not have a patent for Suboxone tablets, it was able to obtain a seven-year period of exclusivity
from the FDA because Suboxone was found to be an orphan drug. 2
Reckitt’s period of
exclusivity for Suboxone tablets was scheduled to expire on October 8, 2009. (Id. at ¶¶ 78-80.)
Plaintiffs allege that Reckitt, knowing its period of exclusivity would soon be over, began
developing Suboxone film and obtaining patent protection for this new product.
actions while developing and marketing its new product are described as a “product-hopping
scheme” and are alleged to be anticompetitive with the aim of maintaining Reckitt’s monopoly in
the Suboxone market.
A. Description of Alleged Conduct
1. Product-Hopping: Development of Suboxone Film and the Alleged
Destruction of the Tablet Market
The NDA for Suboxone film was submitted on October 20, 2008 and was approved
August 30, 2010. The patent for Suboxone film—patent 8,017,150 (“the ‘150 patent”)—expires
September 2023. Generic Suboxone tablets cannot be AB-rated to branded Suboxone film due
to the differences in dosage form—that is, sublingual tablet versus sublingual film. Therefore, a
pharmacist cannot provide a patient with generic Suboxone tablets when a patient has a
prescription for Suboxone film. (Id. at ¶¶ 81, 88.)
The complaint indicates that orphan drug exclusivity may be granted: “(a) on the basis that a
product is intended to treat a disease or condition that has a U.S. prevalence of less than 200,000
persons; or (b) where the sponsor can show that there is no reasonable expectation that the costs
of developing and making available the drug will be recovered from U.S. sales, despite the fact
that the product treats a disease or condition that has a U.S. prevalence of 200,000 or more
individuals.” The FDA found that the latter of these considerations applied to Suboxone. (Id. at
Plaintiffs allege that there are few differences between Suboxone film and Suboxone
tablets, and that the film is not superior to the tablets. In support of this assertion, Plaintiffs
claim that the two products are so similar that Reckitt submitted safety and efficacy studies
performed on Suboxone tablets when seeking approval of the Suboxone film NDA. The two
products are alleged to have equivalent bioavailability, meaning that the products release the
same amount of active ingredients into a patient’s bloodstream. Although Reckitt indicated in its
NDA that the film’s individual packaging reduced the risk for accidental pediatric exposure to
the drug, Plaintiffs assert that the evidence provided by Reckitt on this issue was flawed. Indeed,
Plaintiffs argue that the film may present increased risk for accidental pediatric exposure because
the filmstrip dissolves more quickly than the tablet, and therefore may be more difficult for a
child to spit out in the event of exposure. Plaintiffs also allege that the film has a higher risk of
abuse than the tablets. (Id. at ¶¶ 82-86, Exs. A, B.)
Plaintiffs explain that once the FDA approved the Suboxone film NDA in 2010, Reckitt
launched a fraudulent sales and marketing campaign against the tablet for the purpose of
diverting sales from the tablet, which would soon face generic competition, to the patentprotected film.
Reckitt sales associates allegedly met with physicians and, in addition to
promoting Suboxone film, disparaged Suboxone tablets and warned of false safety concerns. It
is also alleged that Reckitt publicly announced the removal of Suboxone tablets from the market
for these fabricated safety reasons, although it did not actually remove the tablets until six
months later—once the generic Suboxone ANDAs obtained FDA approval.
reportedly raised the price of its tablets in relation to the film formulation despite the fact that the
film was more expensive to manufacture and package. Plaintiffs conclude that Reckitt was
successful in its scheme, and had managed to convert 64% of all Suboxone prescriptions from
tablet to film by the end of 2012. (Id. at ¶¶ 89-92.)3
2. Reckitt Allegedly Delayed ANDA Approvals by Feigning Cooperation in the
On December 22, 2011, the FDA approved a Risk Evaluation and Mitigation Strategy
(“REMS”)4 performed by Reckitt on the issue of the risk of pediatric exposure to Suboxone
tablets. Through the REMS, the FDA required that Reckitt address pediatric exposures via FDAapproved labeling. (DP Compl. ¶ 99.)
Pharmaceutical companies Actavis, Inc. and Amneal (“the Generics”) filed ANDAs for
generic Suboxone tablets in 2009 and May 2011 respectively. On January 6, 2012, the FDA sent
all sponsors of pending ANDAs for Suboxone tablets a notification letter stating that all branded
and generic Suboxone products would be subject to a Single Shared REMS program (“SSRS”).
ANDA filers were directed to contact Reckitt to collaborate on the creation of an SSRS program.
The FDA gave a compliance date of May 6, 2012 for the SSRS. Plaintiffs explain that the FDA
gave a short turn-around time, assuming that the recently approved REMS performed by Reckitt
would simply be amended to add the bioequivalent generic products. (Id. at ¶¶ 98-102.)
Plaintiffs allege that Reckitt used the SSRS as a means to undermine and delay generic
entry by making unnecessary, unprecedented and unreasonable demands on the generic
The End Payors allege that this number was closer to 85% by the time generic Suboxone tablets
entered the market in February 2013. (EP Compl. ¶ 4.)
Under the FDA Amendments Act of 2007, the FDA has the authority to require drug
manufacturers to conduct a Risk Evaluation and Mitigation Strategy (“REMS”). A REMS is a
process by which a drug’s manufacturer demonstrates to the FDA that the drug’s benefits
outweigh its risks. “A REMS can include a medication guide, a package insert, and potential
restrictions on the distribution of the drug.” If the FDA requires a generic to conduct a REMS,
an ANDA will not be approved until the REMS process is completed. (Id. at ¶¶ 57-58; Oral Arg.
Tr. pp. 12-15.)
companies as a condition precedent to Reckitt’s cooperation in the SSRS, despite the fact that
such delay tactics are expressly prohibited by 21 U.S.C. § 355-1(f)(8). Reckitt reportedly turned
down numerous invitations to participate in meetings with the Generics, and refused to engage in
substantive discussions until the Generics agreed to a number of conditions the Generics found
unfavorable, including “an upfront agreement that all manufacturers would share the costs of
product liability for future potential lawsuits.” It is further alleged that Reckitt refused to share
non-public information from its REMS program until its demands were met. (Id. at ¶¶ 105-06.)
The Generics complained to the FDA about Reckitt’s alleged delay tactics and a meeting
was held on June 18, 2012. The FDA acknowledged during this meeting that it could not compel
Reckitt to share its non-public REMS program, and suggested that the Generics develop a new
SSRS without using Reckitt’s information.
Although the FDA implored Reckitt and the
Generics to work together in good faith and to not attempt to block or delay, Plaintiffs claim that
Reckitt’s obstructionist actions continued, and that Reckitt refused to cooperate unless the
Generics agreed to provide Reckitt veto authority or a super-majority vote on all issues relating
to the SSRS. Two days before the SSRS was submitted, Reckitt allegedly argued for the first
time that an important element of the REMS had been omitted and refused to sign the SSRS.
Ultimately, the Generics sought a waiver for approval of their Generics-only SSRS on October 3,
2012. (Id. at ¶¶ 107-12.)
3. Reckitt Allegedly Files a Sham Citizen Petition and Fraudulently Delays That
Filing to Maximize Delay of Generic Tablet Approval
Plaintiffs explain that Reckitt publicly announced the withdrawal of Suboxone tablets
from the market due to false safety concerns on September 25, 2012, just prior to the Generic
REMS waiver request. On that same date, Reckitt filed a Citizen Petition with the FDA for the
alleged purpose of blocking approval of the pending Suboxone ANDAs on purported safety
grounds. The Petition requested that the FDA take three actions: (1) refrain from approving any
BPN/NLX NDA or ANDA for the treatment of opioid addiction that did not include a targeted
pediatric exposure education program, a condition not required for branded Suboxone tablets;
(2) refrain from approving applications for BPN/NLX for opioid addiction that lacked unit-dose
packaging, which was also not a condition for the branded Suboxone tablets; and (3) not approve
any BPN/NLX ANDA for addiction treatment until the FDA determined whether Reckitt had
discontinued Suboxone tablets for safety reasons. (Id. at ¶¶ 113-15.)
Plaintiffs urge that Reckitt’s Citizen Petition was a sham because the FDA had no
statutory or regulatory authority to grant much of the relief requested. For example, the FDA has
no authority to require ANDA filers to mimic non-approved labeling and REMS materials in
order to obtain ANDA approval.5 Nonetheless, Reckitt requested that ANDA filers seeking
approval for generic Suboxone be required to include a pediatric exposure education program
that was not part of the FDA-approved REMS or labeling for Suboxone tablets.
Reckitt’s request for an FDA investigation into the removal of Suboxone tablets from the market
is alleged to be a sham because Reckitt had not withdrawn Suboxone tablets from the market at
the time the request was made. Plaintiffs also argue that Reckitt’s request that all ANDA filers
be required to use unit-dose packaging is a sham because Reckitt continued to sell Suboxone
tablets in bulk packaging during that time period. Finally, the FDA found that the study in
Reckitt’s Citizen Petition—which Reckitt argued supported its unit-dose packaging argument—
acknowledged that it had insufficient information from which to draw definitive conclusions.
(Id. at ¶¶ 117-31.)
See 21 U.S.C. § 355(j)(4)(G); 21 C.F.R. § 314.127(a)(7).
In addition to alleging that the Citizen Petition was a sham, Plaintiffs also argue that it
included a false certification regarding its timeliness and support. Citizen Petitions require the
filer to certify when they first learned of the issues raised. Reckitt certified that it learned of the
risk of accidental pediatric exposure on September 15, 2012 even though its own study indicated
that Reckitt had learned of the risk several years earlier. (Id. at ¶¶ 132-40.)
The FDA denied Reckitt’s Citizen Petition on February 22, 2013, noting that Reckitt’s
announcement that it was withdrawing Suboxone tablets, “given its close alignment with the
period in which generic competition for this product was expected to begin, cannot be ignored.”
The FDA further referred Reckitt’s conduct to the Federal Trade Commission (“FTC”) for
antitrust investigation. (Id. at ¶¶ 141-43.)
Plaintiffs assert that once the Citizen Petition was denied, the FDA immediately granted
final approval of the ANDAs of two generic manufacturers, Amneal and Actavis, for generic
Suboxone tablets. Three weeks later, on March 18, 2013, Reckitt withdrew branded Suboxone
tablets from the market, which Plaintiffs characterize “as a last ditch effort to further coerce the
market to switch to the non-improved film product.” (Id. at ¶¶ 143-44.)
4. Alleged Effects of Reckitt’s Scheme
Plaintiffs urge that Reckitt’s multifaceted scheme outlined above foreclosed or severely
limited generic competition to branded Suboxone. In addition to delaying the Generic’s entry
onto the market, Plaintiffs claim that by the time the generic ANDAs were approved, Reckitt had
coerced physicians to largely convert to prescriptions for Suboxone film, which cannot be
substituted for a generic product. Plaintiffs assert these actions have caused an ongoing antitrust
injury to the Direct Purchasers, the End Payors, and the public at large by preventing Generics
from meaningfully and efficiently competing with Reckitt. Plaintiffs conclude that these actions
were all designed to maintain monopoly profits in violation of the Sherman Act and state law.
(Id. at ¶¶ 145-50, 156.)
B. Specific Causes of Action
The Direct Purchasers seek damages and injunctive relief through the following claims,
all of which are alleged to violate § 2 of the Sherman Act: (1) unlawful maintenance of
monopoly power through an overarching scheme to prevent or delay generic competition
(“Count I”); (2) unlawful maintenance of monopoly power by conversion of the market from
tablet to film formulation (“Count II”); (3) unlawful maintenance of monopoly power by
intentionally delaying the SSRS process and violating 21 U.S.C. § 355-1(f)(8) (“Count III”);
(4) unlawful maintenance of monopoly power by filing a sham Citizen Petition (“Count IV”);
and (5) unlawful maintenance of monopoly power by fraudulently delaying the filing of the
Citizen Petition (“Count V”). (Id. at ¶¶ 166-200.)
The End Payors assert the following causes of action: (1) monopolization and
monopolistic scheme under state law (listing 29 state statutes) (“Count I”); (2) attempted
monopolization under state law (listing 29 state statutes) (“Count II”); (3) unfair and deceptive
trade practices under state law (listing 28 state statutes) (“Count III”); (4) injunctive and
declaratory relief under § 16 of the Clayton Act for Reckitt’s violations of § 2 of the Sherman
Act (“Count IV”); and (5) unjust enrichment under state law (under 48 states and the District of
Columbia) (“Count V”). (EP Compl. ¶¶ 163-99.)
Reckitt has filed motions to dismiss each of the Plaintiffs’ amended complaints.
STANDARD OF REVIEW
In deciding a motion to dismiss, the court must “accept as true all allegations in the
complaint and all reasonable inferences that can be drawn therefrom, and view them in the light
most favorable to the non-moving party.” DeBenedictis v. Merrill Lynch & Co., Inc., 492 F.3d
209, 215 (3d Cir. 2007) (quoting Rocks v. City of Philadelphia, 868 F.2d 644, 645 (3d Cir.
1989)). Reckitt raises arguments for dismissal under the pleading standards of both Federal Rule
of Civil Procedure 8(a) and 9(b) in their motions.
A. Pleading under Rule 8(a)
Under Rule 8(a), in order to survive a motion to dismiss brought under Federal Rule of
Civil Procedure 12(b)(6), a complaint must “contain sufficient factual matter, accepted as true, to
‘state a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plausibility
standard requires more than a “sheer possibility that a defendant has acted unlawfully.” Id. To
determine the sufficiency of a complaint under Twombly and Iqbal, a court must take the
following three steps: (1) the court must “tak[e] note of the elements a plaintiff must plead to
state a claim;” (2) the court should identify the allegations that, “because they are no more than
conclusions, are not entitled to the assumption of truth;” and (3) “where there are well-pleaded
factual allegations, a court should assume their veracity and then determine whether they
plausibly give rise to an entitlement for relief.” Burtch v. Milberg Factors, Inc., 662 F.3d 212,
221 (3d Cir. 2011) (citations omitted).
B. Pleading under Rule 9(b)
Rule 9(b) provides, “In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of
a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). The pleadings must be specific
enough to “place the defendants on notice of the precise misconduct with which they are
charged, and to safeguard defendants against spurious charges of immoral and fraudulent
behavior.” Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir.
1984). “Rule 9(b) requires, at a minimum, that plaintiffs support their allegations of . . . fraud
with all of the essential factual background that would accompany the first paragraph of any
newspaper story—that is, the who, what, when, where and how of the events at issue.” United
States ex rel. Streck v. Allergan, Inc., 894 F. Supp. 2d 584, 590-91 (E.D. Pa. 2012) (quoting In re
Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 217 (3d Cir. 2002)).
A. Overview - Reckitt’s Motion to Dismiss the Direct Purchasers’ Complaint
All of the Direct Purchasers’ claims invoke § 2 of the Sherman Act, which states: “Every
person who shall monopolize, or attempt to monopolize, or combine or conspire with any other
person or persons, to monopolize any part of the trade or commerce among the several States, or
with foreign nations” is guilty of an offense and subject to penalties. 15 U.S.C. § 2.
The following are elements of a § 2 monopolization claim: “(1) the possession of
monopoly power in the relevant market and (2) the willful acquisition or maintenance of that
power as distinguished from growth or development as a consequence of a superior product,
business acumen, or historic accident.” United States v. Grinnell Corp., 384 U.S. 563, 570-71
(1966). Simple possession of monopoly power is not enough; a defendant must also engage in
exclusionary conduct to run afoul of § 2. Walgreen Co. v. AstraZeneca Pharm. L.P., 534 F.
Supp. 2d 146, 150 (D.D.C. 2008) (quoting Phillip E. Areeda & Herbert Hovenkamp, 3 Antitrust
Law § 650a(1) at 67 (rev. ed. 1996)). “Exclusionary conduct is ‘that which prevents actual or
potential rivals from competing or impairs their opportunities to do so effectively.’” Id. “The
[Sherman Act] directs itself not against conduct which is competitive, even severely so, but
against conduct which unfairly tends to destroy competition itself.” United States v. Microsoft
Corp., 253 F.3d 34, 58 (D.C. Cir. 2001) (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S.
447, 458 (1993)).
The plaintiff bears the burden of demonstrating that a monopolist’s conduct has the
requisite anticompetitive effect, and if he is successful, the burden moves to the defendant to
demonstrate a procompetitive justification for its conduct. Id. at 58-59 (citing Eastman Kodak
Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 483 (1992)). Finally, “if the monopolist’s
procompetitive justification stands unrebutted, then the plaintiff must demonstrate that the
anticompetitive harm of the conduct outweighs the procompetitive benefit.” Id.
Reckitt raises four core arguments for dismissal of the Direct Purchasers’ claims:
(1) Count II, relating to the introduction of Suboxone Film, fails because the law presumes that
the introduction of new and different products increases competition; (2) Count III, relating to
Reckitt’s alleged failure to cooperate during the REMS period, fails because the Supreme Court
has unequivocally held that a monopolist has no duty to deal with its competitors; (3) Counts IV
and V, relating to Reckitt’s Citizen Petition, should be dismissed because the Citizen Petition
was not a sham and did not delay Generic market entry; and (4) Count I, which asserts a claim
for the combined effect of Reckitt’s actions, fails because none of the underlying actions violate
the antitrust laws, and unsuccessful claims cannot be combined to state a successful one. Each of
these arguments is addressed below.6
B. Count II – Introduction of Suboxone Film
Reckitt argues that the introduction of a new product by definition increases competition
in the relevant market, and therefore cannot be found to be anticompetitive. Reckitt further
All of the arguments raised in Reckitt’s motion to dismiss the Direct Purchasers’ complaint
have also been incorporated as arguments requiring dismissal of the End Payors’ state law
antitrust claims. As the arguments raised and facts alleged apply equally to both groups of
Plaintiffs, I will refer generally to Plaintiffs in this section where appropriate.
asserts that Plaintiffs acknowledged in their complaints that Suboxone film made improvements
to the tablets which are procompetitive, not exclusionary. Finally, Reckitt argues that any harm
that would arise from the introduction of a new product is inflicted upon competitors, not
competition itself, and therefore is not the type of injury the antitrust laws were created to
Does the “Product-Hopping” Conduct Alleged Constitute Exclusionary
“‘Anticompetitive conduct’ can come in too many different forms, and is too dependent
upon context, for any court or commentator ever to have enumerated all the varieties.” West
Penn Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 109 (3d Cir. 2010) (quoting LePage’s
Inc. v. 3M, 324 F.3d 141, 152 (3d Cir. 2003)). “[A]s a general rule, any firm, even a monopolist,
may . . . bring its products to market whenever and however it chooses.” Steamfitters Local
Union No. 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912, 925 n.7 (3d Cir. 1999)
(quoting Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 286 (2d Cir. 1979)). New and
improved products are one of the benefits brought about by healthy competition. Abbott Labs. v.
Teva Pharm. USA, Inc., 432 F. Supp. 2d 408, 420 (D. Del. 2006) (citing Berkey Photo, 603 F.2d
at 286). Even a monopolist may expand its market share and increase demand for its products
through technological innovation, “and such actions are ‘perfectly consistent with the
competitive forces that the Sherman Act was intended to foster.’” Id. (quoting Foremost Pro
Color, Inc. v. Eastman Kodak Co., 703 F.2d 534, 546 (9th Cir. 1983)).
Because ordinarily innovation will also inflict harm upon competitors, “courts should not
condemn a product change . . . unless they are relatively confident that the conduct in question is
anticompetitive.” Id. at 421 (quoting Herbert Hovenkamp, Mark D. Janis & Mark A. Lemley, IP
and Antitrust § 12.1). However, “when the introduction of a new product by a monopolist
prevents consumer choice, greater scrutiny is appropriate” and the “basis for judicial deference is
removed.” Id. When assessing whether conduct is exclusionary, “it is not necessary that all
competition be removed from the market. The test is not total foreclosure, but whether the
challenged practices bar a substantial number of rivals or severely restrict the market’s ambit.”
United States v. Dentsply Int’l, Inc., 399 F.3d 181, 191 (3d Cir. 2005) (citing LePage’s, 324 F.3d
at 159-60; Microsoft, 253 F.3d at 69).
In support of its argument that Plaintiffs have failed to establish exclusionary conduct
under a “product hopping” theory, Reckitt relies heavily upon Walgreen Co. v. AstraZeneca
Pharmaceuticals L.P., 534 F. Supp. 2d 146 (D.D.C. 2008). In that case, AstraZeneca marketed
prescription Prilosec capsules, a heartburn medication, through the expiration of its patent in
October 2001. In June 2003, the FDA approved an over-the-counter version of Prilosec and
granted AstraZeneca exclusivity in that market through June 2006. AstraZeneca also brought
prescription Nexium, another heartburn medication, to the market during this time period, and
that patent did not expire until 2014. AstraZeneca very aggressively promoted and “detailed”7
Nexium, while simultaneously ceasing to promote prescription Prilosec. As a result of this
marketing, by the time generic prescription Prilosec entered the market, the generics were only
able to capture 30% of the market, which the plaintiffs alleged was much lower than they would
have captured absent AstraZeneca’s intervention. AstraZeneca’s conduct was alleged to be
exclusionary because it used “distortion and misdirection in marketing, promoting and detailing
Nexium” so as to switch the market from Prilosec, which now had generic competition, to a
virtually-identical drug, Nexium, which did not. Id. at 148-49.
“‘Detailing’ in the retail pharmaceutical business refers to the practice of sending company
representatives to doctors’ offices to distribute samples and promotional materials and
information.” Walgreen, 534 F. Supp. 2d at 149 n.4.
The court determined that AstraZeneca’s actions did not violate § 2 of the Sherman Act
and granted the defendants’ motions to dismiss because marketing Nexium did not eliminate
choices available to the consumer. Prescription Prilosec was never removed from the market,
allowing consumers to obtain prescription Prilosec, and by extension generic Prilosec, if they
preferred that product. Id. at 150-52. The court also found that the plaintiffs had not established
an injury because “[t]he fact that a new product siphoned off some of the sales from the old
product and, in turn, depressed sales of the generic substitutes for the old product” does not
establish an antitrust injury, as it does not interfere with the generics’ freedom to compete. Id. at
Plaintiffs assert that Walgreen is factually distinguishable from the case before me, and
urge that I follow the reasoning set forth in Abbott Laboratories v. Teva Pharmaceuticals USA,
Inc., 432 F. Supp. 2d 408 (D. Del. 2006) (“TriCor”). In TriCor, the court found that the plaintiffs
had stated a claim for a § 2 antitrust violation where the defendants, the brand-name
manufacturer of TriCor, allegedly attempted to thwart generic competition through a producthopping scheme. The plaintiffs in TriCor claimed that the defendants had engaged in the
following conduct: (1) the defendants changed the formulation of TriCor from capsules to tablets
in order to prevent generic substitution; (2) after the tablet formulation was approved, the
defendants stopped selling TriCor capsules; (3) the defendants bought back the existing supplies
of TriCor capsules from pharmacies; and (4) the defendants changed the code for TriCor
capsules in the National Drug Data File (“NDDF”) to “obsolete,” which prevented pharmacies
from filling TriCor prescriptions with a generic capsule formulation. Id. at 415-16.
The defendants in TriCor raised a nearly identical argument as Reckitt does here: that the
introduction of a new product was procompetitive per se and that improvements had been made
from one formulation to another. Id. at 420. The court recognized that deference is ordinarily
given to innovation and the creation of new products. However, given the unique nature of the
pharmaceutical drug market and the actions taken by the defendants in removing old
formulations from the market and preventing consumer choice, the court determined that the
plaintiffs had set forth sufficient facts to establish exclusionary conduct and survive a motion to
dismiss. Id. at 421-22. The court reasoned that the nature of the pharmaceutical drug market
warranted applying the rule of reason approach identified in United States v. Microsoft Corp.,
253 F.3d 34, 58 (D.C. Cir. 2001), where the defendant’s procompetitive justifications are
weighed against the anticompetitive results. Id. at 422.
The defendants in TriCor further argued that their product-hopping could not be
exclusionary because, although generic TriCor capsules could not be exchanged for a brandname TriCor prescription, the generics were not foreclosed from marketing their own TriCor
formulations. The court rejected this argument, finding that complete foreclosure from the
market was not the appropriate standard. Instead, the court determined that the generics could
provide generic substitutes for the current TriCor formulation, which is alleged to
be their cost-efficient means of competing in the pharmaceutical drug market.
That opportunity has allegedly been prevented entirely by Defendants’ allegedly
manipulative and unjustifiable formulation changes. Such a restriction on
competition, if proven, is sufficient to support an antitrust claim in this case.
Id. at 422.
The conduct alleged in the case before me seems to fall somewhere between that alleged
in Walgreen and TriCor.8 Unlike the facts at issue in Walgreen, Reckitt announced that it was
At oral argument, Reckitt also claimed that Mylan Pharmaceuticals, Inc. v. Warner Chilcott
Public Ltd. Co., 2013 WL 5692880 (E.D. Pa. June 12, 2013), supported its position. There, the
district court expressed skepticism as to whether the defendants’ alleged product-hopping
removing Suboxone tablets from the market several months prior to generic approval, and
actually did remove the tablets from the market within a few weeks of generic entry. Therefore,
the freedom of consumer choice that the Walgreen court found compelling is more limited here.
However, the restriction of the market’s ambit does not appear to be quite as extreme as that
found in TriCor, as it is not alleged that Reckitt bought back existing Suboxone tablets or labeled
the product “obsolete.”
Thus, while Walgreen and TriCor are instructive, they are not
dispositive of whether Plaintiffs have pleaded sufficient facts to survive Defendants’ motion on
Although the issue of product-hopping is relatively novel, what is clear from the case law
is that simply introducing a new product on the market, whether it is a superior product or not,
does not, by itself, constitute exclusionary conduct. The key question is whether the defendant
combined the introduction of a new product with some other wrongful conduct, such that the
comprehensive effect is likely to stymie competition, prevent consumer choice and reduce the
market’s ambit. This analysis must be undertaken with the somewhat unique characteristics of
the pharmaceutical market in mind.
Plaintiffs allege that the wrongful conduct included raising false safety concerns and
disparaging Suboxone tablets, both of which played an important role in Reckitt’s success in
switching the market from tablets to film. Reckitt counters that false disparagement of a product
cannot give rise to antitrust liability under Santana Products Inc. v. Bobrick Washroom
Equipment, Inc., 401 F.3d 123 (3d Cir. 2005). In Santana, the United States Court of Appeals
for the Third Circuit found that a company’s disparagement of another company’s product, even
scheme constituted exclusionary conduct. Id. at *2. However, the court in Mylan did not
dismiss the plaintiffs’ claims, instead finding that the development of a record was necessary.
if the statements were untrue, was not a restraint of trade absent “coercive” measures—that is,
“measures that prevented [the plaintiff] from selling its products to any willing buyer or
prevented others from dealing with [the plaintiff].” Id. at 132. However, the Third Circuit has
since remarked that, despite its prior holding in Santana, “in some cases, such defamation, which
plainly is not competition on the merits, can give rise to antitrust liability, especially when it is
combined with other anticompetitive acts.” W. Penn Allegheny Health Sys., Inc. v. UPMC, 627
F.3d 85, 109 n.14 (3d Cir. 2010) (citing LePage’s, 324 F.3d at 153, 162).
Having carefully reviewed Plaintiffs’ complaint, I find that the facts presented
sufficiently allege that the disparagement of Suboxone tablets took place alongside “coercive”
measures. The threatened removal of the tablets from the market in conjunction with the alleged
fabricated safety concerns could plausibly coerce patients and doctors to switch from tablet to
film. A patient that preferred the tablets despite the safety concerns might be further persuaded
to switch to the film, believing that their favored product would soon be removed from the
Reckitt also argues that Plaintiffs’ allegations of false disparagement are insufficient
because the complaints do not plead fraud with sufficient specificity to satisfy Rule 9(b) of the
Federal Rules of Civil Procedure. See Lum v. Bank of America, 361 F.3d 217, 228 (3d Cir.
2004) (recognizing that antitrust allegations involving fraud must comply with the pleading
requirements of Rule 9(b)) (abrogation on other grounds recognized in In re Ins. Brokerage
Antitrust Litig., 618 F.3d 300, 323 n.22 (3d Cir. 2010)). “Rule 9(b) requires, at a minimum, that
plaintiffs support their allegations of . . . fraud with all of the essential factual background that
would accompany the first paragraph of any newspaper story[—]that is, the who, what, when,
where and how of the events at issue.” U.S. ex rel. Streck v. Allergan, Inc., 894 F. Supp. 2d 584,
590-91 (E.D. Pa. 2012) (quoting In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 217
(3d Cir. 2002)).
Plaintiffs claim that in conjunction with the switch from tablet to film in 2010, Reckitt
“implemented a massive fraudulent sales and marketing campaign to convert all or substantial
[Suboxone] prescriptions from tablets to film.” (DP Compl. ¶ 89.) It is also alleged that Reckitt
sales representatives met with physicians to promote the film formulation while simultaneously
discouraging physicians from writing prescriptions for Suboxone tablets under the guise of false
safety concerns—in particular, that the lack of unit dose packaging in the tablets raised the risk
of pediatric exposure. (Id. at ¶¶ 89, 95.) Further, Plaintiffs claim that Reckitt announced the
removal of the tablets from the market on September 25, 2012 due to fabricated safety concerns
in an attempt to switch patients from the tablet to the film. (Id. at
¶¶ 89, 93-94.) Instead of
actually removing the product at that time, Reckitt allegedly continued to sell tablets through
March 2013, which Plaintiffs argue demonstrates the falsity of Reckitt’s stated safety concerns.
(Id. at ¶ 94.) According to Plaintiffs, Reckitt’s goal in making these misrepresentations was to
transfer as much of the market from tablet to film as possible prior to generic entry. (Id. at ¶ 93.)
These allegations have been made with particularity in accordance with Rule 9(b), and are
sufficient to “place the defendants on notice of the precise misconduct with which they are
See Seville, 742 F.2d at 791.
Therefore, I will consider these allegations in
determining whether the complaints plausibly make out an antitrust violation.
With regard to the withdrawal of Suboxone tablets from the market, Reckitt focuses on
the fact that the defendants in TriCor engaged in repurchasing existing supplies held by
pharmacies and changing the NDDF code to obsolete—facts which are not alleged here. Reckitt
asserts that because it did not engage in this conduct, the Generics are not now, nor have they
ever been, foreclosed from selling their products, which undermines Plaintiffs’ claims of
While Reckitt did not repurchase existing supplies held by pharmacies or change the
NDDF code on the tablets to obsolete, the withdrawal of Suboxone tablets is alleged to have
created a similar effect of reducing consumer choice. While Plaintiffs acknowledge that the
Generics have not been completely foreclosed from the market, neither were the generics in
TriCor. As noted previously, complete foreclosure is not the standard articulated by the Third
Circuit for establishing anticompetitive conduct. Rather, “[t]he test is not total foreclosure, but
whether the challenged practices bar a substantial number of rivals or severely restrict the
market’s ambit.” Dentsply, 399 F.3d at 191. As recognized in TriCor, “[c]ompetitors need not
be barred ‘from all means of distribution,’ if they are barred ‘from the cost-efficient ones.’”
TriCor, 432 F. Supp. 2d at 423 (quoting Microsoft, 253 F.3d at 64).9
Plaintiffs have plausibly alleged that various market forces unique to the pharmaceutical
industry make generic substitution the cost-efficient means of competing for companies selling
generic pharmaceuticals. For example, Plaintiffs assert that a disconnect exists between the
person paying for the prescription and the person selecting the appropriate treatment. Due to this
disconnect, the ordinary market forces that would allow consumers to consider price when
I note that Plaintiffs also alleged that Reckitt engaged in anticompetitive behavior by reducing
the price of its film and raising the price of the tablets, despite the fact that the film was more
expensive to manufacture. Reckitt correctly notes that only predatory pricing—that is, price
decreases by a monopolist below any reasonable measure of cost—can be anticompetitive. Atl.
Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 339 (1990) (“in the context of pricing
practices, only predatory pricing has the requisite anticompetitive effect”); see also Schor v.
Abbott Labs., 457 F.3d 608, 610-11 (7th Cir. 2006). While there are no allegations of predatory
pricing here, I do not believe that this completely forecloses Plaintiffs’ antitrust claims. See ZF
Meritor, LLC v. Eaton Corp., 696 F.3d 254, 277 (3d Cir. 2012) (finding that, where “price itself
was not the clearly predominant mechanism of exclusion,” failure to establish predatory pricing
did not preclude the plaintiffs’ claim).
selecting a product are derailed. The patient also cannot simply request to receive a generic from
his or her pharmacist because the film and the generic tablets are not AB-rated and thus may not
For all of these reasons, as it relates to their “product-hopping” allegations, I find that
Plaintiffs have plausibly pleaded exclusionary conduct, as required for an antitrust claim.
2. Does the Complaint Sufficiently Plead an Injury to Competition?
Having determined that Plaintiffs have sufficiently alleged exclusionary conduct as it
relates to the “product-hopping” scheme, I now turn to whether an antitrust injury has been
properly pleaded. Reckitt argues that Plaintiffs have failed to establish an antitrust injury on
Count II because the introduction of Suboxone film in and of itself is not alleged to have delayed
Generic entry into the marketplace. Reckitt urges that the only injury that could have been
caused by the film’s introduction stems from an increase in competition.
Lost profits attributable to increased competition is not the type of injury the antitrust
laws were designed to redress. See Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477,
The antitrust laws “were enacted for ‘the protection of competition not
competitors.’” Id. at 488 (quoting Brown Shoe Co. v. United States, 370 U.S. 294, 320 (1962)).
“[W]hen an alleged antitrust conspiracy involves multiple acts, [t]he character and effect of [that]
conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by
looking at it as a whole.” Smithkline Beecham Corp. v. Apotex Corp., 383 F. Supp. 2d 686, 699,
702 (E.D. Pa. 2004) (quoting Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690,
699 (1962)) (quotation marks omitted).10 “[T]he existence of antitrust injury is not typically
Although Continental Ore involved a § 1 conspiracy claim, the Third Circuit has applied its
reasoning to § 2 cases as well. LePage’s, 324 F.3d at 162 (“the courts must look to the
monopolist’s conduct taken as a whole rather than considering each aspect in isolation”).
resolved through motions to dismiss,” although courts can and do decide these issues at the
12(b)(6) stage. Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 416-19 (3d
Cir. 1997) (citing Brader v. Allegheny Gen. Hosp., 64 F.3d 869, 876 (3d Cir. 1995)).
Plaintiffs allege that by wrongfully suppressing generic competition on the market, they
were forced to pay more for Suboxone products than they otherwise would have paid. “When a
monopolist’s actions are designed to prevent one or more new or potential competitors from
gaining a foothold in the market by exclusionary, i.e. predatory, conduct, its success in that goal
is not only injurious to the potential competitor but also to competition in general.” LePages,
324 F.3d at 159; see also Dentsply, 399 F.3d at 191. Although Count II of the Direct Purchasers’
complaint relates to Reckitt’s introduction of Suboxone film, and generally the introduction of
new products does not create antitrust injury, I must still consider Plaintiffs’ allegations of
Reckitt’s activity as a whole, which includes the withdrawal of Suboxone tablets, the alleged
fraudulent marketing campaign and tactics designed to delay ANDA approval (discussed infra).
If the anticompetitive effect of this conduct is proven, and it resulted in purchasers paying
inflated prices, Plaintiffs could establish harm to competition itself. See Tunis Bros. Co. v. Ford
Motor Co., 952 F.2d 715, 728 (3d Cir. 1991) (“An antitrust plaintiff must prove that challenged
conduct affected the prices, quantity or quality of goods or services”) (quotation marks omitted).
Therefore, I find that Plaintiffs have pleaded sufficient facts to establish antitrust injury.
Defendants further allege that the Direct Purchasers do not have standing because there is
a more direct victim of Reckitt’s conduct—the Generic manufacturers. Section 4 of the Clayton
Act, which allows treble damages for violation of the antitrust laws, states as follows: “any
person who shall be injured in his business or property by reason of anything forbidden in the
antitrust laws may sue therefor in any district court of the United States . . . and shall recover
threefold the damages by him sustained.” 15 U.S.C. § 15. The Direct Purchasers who are
overcharged as a result of an antitrust violator’s actions are generally considered to have antitrust
standing. See Illinois Brick Co. v. Illinois, 431 U.S. 720, 729 (1977) (“the overcharged direct
purchaser, and not others in the chain of manufacture or distribution, is the party ‘injured in his
business or property’”). Therefore, I do not find Reckitt’s standing argument convincing.
In conclusion, I find that the Direct Purchasers’ claim under Count II for introduction of
the Suboxone film in the context of an alleged product-hopping scheme should survive the
motion to dismiss stage.
Count III – Unlawful Maintenance of Monopoly Power by Intentionally
Delaying the SSRS Process and Violating 21 U.S.C. § 355-1(f)(8)
Reckitt asserts that Count III of the Direct Purchaser’s complaint should be dismissed
because the SSRS process, where the parties tried to work together to establish the safe use of the
drug, was simply a course of dealing and the antitrust laws do not obligate Reckitt to interact
with its competitors on terms they find favorable. Reckitt garners support from a line of
Supreme Court cases on the “duty to deal.”
In Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398
(2004), the Supreme Court considered whether a complaint alleging that Verizon had breached
its duty under the Telecommunications Act of 1996 to facilitate market entry by competitors
stated a claim for violation of § 2 of the Sherman Act. The Telecommunications Act of 1996
required Verizon, and other incumbent local telephone companies, to facilitate competitors’
market entry by requiring the incumbent to share its network with competitors. Verizon was also
obligated to provide access to its operations support systems, which ensured quality of service.
Verizon was accused of intentionally failing to fill operations support orders in violation
of the Act and was investigated by the FCC for its conduct. Customers of Verizon’s competitors
filed suit for antitrust violation, alleging that Verizon had engaged in an anticompetitive scheme
to discourage customers from becoming or remaining customers of competing companies. Id. at
402-04. The Court held that “as a general matter, the Sherman Act ‘does not restrict the long
recognized right of [a] trader or manufacturer engaging in an entirely private business, freely to
exercise his own independent discretion as to the parties with whom he will deal.’” Id. at 408
(quoting United States v. Colgate & Co., 250 U.S. 300, 307 (1919)). The Court concluded that
the antitrust laws did not create a duty to deal in that instance, as they provided little additional
benefit to the regulations already in place.
The Court noted “[w]here such a [regulatory]
structure exists, the additional benefit to competition provided by antitrust enforcement will tend
to be small, and it will be less plausible that the antitrust laws contemplate such additional
scrutiny.” Id. at 411-12.
The Supreme Court reaffirmed these principles in Pacific Bell Telephone Co. v. Linkline
Communications, Inc., 555 U.S. 438 (2009).
There, the FCC required AT&T to sell
transmission service to independent DSL providers for the purposes of increasing competition.
Although it made its service available, AT&T was accused of “price squeezing” its
competitors—that is, providing access to its DSL framework to competitors on the wholesale
market at a high price, but selling its DSL services to customers on the retail market at a low
price. The plaintiffs alleged that AT&T’s competitors were driven out of the market because the
high wholesale costs prevented them from matching AT&T’s low retail prices. Linkline, 555
U.S. at 442-43. The Court, relying on Trinko, held that the high wholesale prices to competitors
did not violate the antitrust laws in the absence of a “duty to deal.” The Court further reasoned
that the plaintiffs could not establish an antitrust injury based on AT&T charging customers at
low rates unless the plaintiffs demonstrated predatory pricing—that is, pricing below costs where
there is a dangerous probability that the losses can be recouped. Id. at 450-51.
Trinko and Linkline instruct that the antitrust laws do not create a duty for competitors to
work together. Statutes and regulations requiring cooperation between rivals do not alter this
analysis; in fact, regulation indicates that antitrust scrutiny is not necessary or prudent. The
Court noted that although the right for a monopolist to refuse to deal with its competitors is not
unqualified, it has “been very cautious in recognizing such exceptions, because of the uncertain
virtue of forced sharing and the difficulty of identifying and remedying anticompetitive conduct
by a single firm.” Trinko, 540 U.S. at 408.
The main exception to the line of cases holding that competitors do not have a duty to
deal is Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985). There, the
Court considered a course of dealing between two companies that owned ski resorts in Aspen.
Beginning in 1962, the companies worked together to sell skiers an interchangeable ticket that
could be used on any of the four mountains in Aspen. Id. at 587-89. For over fifteen years,
Aspen Skiing Co. and Aspen Highlands coordinated to issue passes that covered both
companies’ mountains and divided the profits according to the percentage of skiers that visited a
particular mountain. Id. at 591. However, in 1978, Aspen Skiing Co. decided to discontinue the
4-area ticket unless Aspen Highlands would accept a 12.5% fixed percentage of the revenue,
which was lower than the actual usage of its mountain. When Highlands refused, Aspen Skiing
Co. began selling a pass covering only its three mountains. When Highlands attempted to
purchase Aspen Skiing’s lift tickets to create a multi-pass on its own, Aspen Skiing refused, even
at retail price. Id. at 592-94. Highlands brought an antitrust claim under § 2, arguing that Aspen
Skiing had monopolized the market for downhill skiing in Aspen.
The Court ultimately held that the right to refuse to deal was not unqualified, and that a
reasonable jury could find that Aspen Skiing’s conduct was exclusionary. In reaching this
conclusion, the Court significantly relied upon the prior cooperation between the two
competitors that spanned many years. The Court noted that there was significant consumer
demand for the four-mountain pass and many consumers felt that they could not go to the
mountain of their choice once that pass had been eliminated. The Court determined that by
prohibiting Highlands’ use of its lift tickets, even at market price, Aspen Skiing’s sole motivation
was to harm Highlands. Id. at 601, 605-09.
Here, throughout the SSRS process, the FDA directed the parties to work together in
good faith to develop a REMS program that would ultimately lead to ANDA approval for the
Generics. The parties engaged in negotiations, and Reckitt is alleged to have taken unreasonable
positions and utilized delay tactics to keep Generics off of the market for as long as possible.
This SSRS process, in which competitors were required to work together, should be analyzed in
light of the precedent outlined above.
Plaintiffs rely heavily upon 21 U.S.C. § 355-1(f)(8), which requires the parties to work
together in good faith and not use the SSRS process to block or delay ANDA approval. 11
Reckitt argues that even if 21 U.S.C. § 355-1(f)(8) created a duty to deal, it does not even
apply under these circumstances. 21 U.S.C. § 355-1(f)(8) states:
No holder of an approved covered application shall use any element to assure safe
use required by the Secretary under this subsection to block or delay approval of
an application under section 355(b)(2) or (j) of this title or to prevent application
of such element under subsection (i)(1)(B) to a drug that is the subject of an
abbreviated new drug application.
Reckitt asserts that the complaints include no facts to indicate that the elements to assure safe use
in Reckitt’s REMS were used, or even could be used, to block or delay any ANDA. Instead,
they frame Plaintiffs’ argument as disliking the terms by which Reckitt sought to negotiate.
Plaintiffs respond by pointing to sections of its complaint alleging that § 355-1(f)(8) applies, and
However, Linkline and Trinko undermine Plaintiffs’ position, as the Supreme Court has
unequivocally stated that statutes and regulations requiring cooperation between competitors do
not create an antitrust duty to deal. In fact, these cases found that the regulatory structure
requiring cooperation actually diminishes the need for antitrust scrutiny. Aspen Skiing, the only
Supreme Court case recognizing a failure to deal as anticompetitive, does not apply here because
there is no long-standing, preexisting course of dealing between Reckitt and the Generics.12
Finally, Plaintiffs note that the only two cases from this circuit alleging antitrust
violations for failure to provide information during the REMS process survived the motion to
dismiss stage. See Lannett Co., Inc. v. Celgene Corp., Dkt. No. 08-cv-3920, Doc. No. 42 (E.D.
Pa. Mar. 30, 2011) (Savage, J.) (denying motion to dismiss without comment); Actelion Pharm.
Ltd. v. Apotex Inc., 12-cv-5743, Doc. No. 90 (D.N.J. Oct 21, 2013) (Hillman, J.) (denying
motion for judgment on the pleadings “for reasons stated during oral argument”). While this is
true, Lannett and Actelion are distinguishable because the elements to assure safe use in those
cases prevented the generics from obtaining the brand-name pharmaceutical to conduct
bioequivalency testing during the REMS process. Therefore, the generics were allegedly unable
to file an ANDA as a result of the defendants’ actions. Here, the Generics were able to obtain
a letter written to the FDA, which recounts that the FDA previously warned Reckitt that attempts
to block or delay would violate § 355-1(f)(8). Plaintiffs argue that the FDA’s interpretation of
the FDCA is entitled to deference. However, there is no document attached to the complaint that
actually includes a statement from the FDA on this issue. Therefore, I agree with Defendants
that it is dubious whether Plaintiffs have sufficiently pleaded that the statute even applied.
Nevertheless, I need not decide this issue because, even assuming the statute applies, Count III
will still be dismissed.
Plaintiffs’ reliance on Safeway Inc. v. Abbott Laboratories, 761 F. Supp. 2d 874 (N.D. Cal.
2011) is misplaced. In Safeway, the court found that there had been a prior course of dealing
between the manufacturer and its competitors, that there was evidence that it was only willing to
negotiate on unreasonable terms, and there was evidence that the manufacturer refused to
provide its competitors the same terms that it provided to its retail customers. Id. at 892-95.
Plaintiffs here have only alleged that Reckitt refused to negotiate reasonably. There is no history
of collaboration prior to the SSRS process. Therefore, Safeway is distinguishable.
Suboxone and conduct bioequivalency testing, as their ANDAs were pending before the SSRS
process even began. The Generics were also capable of submitting an SSRS without Reckitt’s
involvement, and ultimately did just that. It would have been easier to have Reckitt provide its
REMS to its competitors with no strings attached, and participation on Reckitt’s part would have
allowed the process to move more quickly. However, a monopolist “certainly has no duty to
deal under terms and conditions that the rivals find commercially advantageous.” Linkline, 555
U.S. at 450.
The antitrust laws do not impose a duty on Reckitt to aid the Generics in obtaining
expeditious approval of an ANDA. While other courts have indicated that antitrust liability may
attach where the SSRS process is manipulated to completely preclude a generic from filing an
ANDA, that is not the situation presently before me. To the extent that § 355-1(f)(8) prohibits
name-brand drug manufacturers from manipulating the process to cause delay, this statute
provides for increased FDA oversight and diminishes the need for antitrust scrutiny.
Accordingly, I will grant Reckitt’s motion as to Count III of the Direct Purchasers’ complaint.
D. Counts IV & V – Unlawful Maintenance of Monopoly Power by Filing a Sham
Citizen Petition and Unlawful Maintenance of Monopoly Power by
Fraudulently Delaying the Filing of the Citizen Petition
Reckitt next argues that Counts IV and V of the Direct Purchasers’ complaint must be
dismissed for two reasons: (1) Plaintiffs have failed to adequately plead that the Citizen Petition
was a sham, such that it would be subject to antitrust scrutiny; and (2) even if the Citizen Petition
was a sham, a statute forbid the FDA from delaying ANDA approval while the Petition was
decided, and therefore, no injury could have resulted. I address these arguments in turn.
1. Have Plaintiffs Plausibly Pleaded that the Citizen Petition was a Sham?
“Those who petition government for redress are generally immune from antitrust
liability.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 56
(1993). However, immunity is not extended to “sham” activities—that is, activity (1) that is
“objectively baseless in the sense that no reasonable litigant could realistically expect success on
the merits”; and (2) which “conceals ‘an attempt to interfere directly with the business
relationships of a competitor,’ through the ‘use [of] the governmental process—as opposed to the
outcome of that process—as an anticompetitive weapon.’”
Id. at 60-61 (quoting E. R.R.
Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144 (1961); City of Columbia
v. Omni Outdoor Adver., Inc., 499 U.S. 365, 380 (1991)) (emphasis in original).
21 U.S.C. § 355(q)(1)(E) provides that “[i]f the Secretary determines that a [Citizen]
[P]etition . . . was submitted with the primary purpose of delaying the approval of an application
and the petition does not on its face raise valid scientific or regulatory issues, the Secretary may
deny the petition at any point based on such determination.” When Reckitt’s Citizen Petition
was initially submitted, several Generics requested that the FDA deny it as frivolous and
intended for delay under this Section, but the FDA declined to do so. (DP Compl., Exs. E, G.)
Reckitt urges that I find as a matter of law that the Citizen Petition was not a sham based
upon the Petition itself and the FDA’s response thereto. Whether petitioning activity is a sham is
generally a question for the jury. In re Flonase Antitrust Litig., 795 F. Supp. 2d 300, 310 (E.D.
Pa. 2011). However, “a court may decide probable cause as a matter of law” where “there is no
dispute over the predicate facts of the underlying . . . proceeding.” Prof’l Real Estate Investors,
Inc., 508 U.S. at 63. Reckitt argues that the Petition was not a sham because (1) the FDA took
the full 150-day period for review and denied requests to summarily deny the petition; (2) the
FDA granted partial relief on Reckitt’s requests; (3) a reasonable litigant would not have known
that the FDA would require Reckitt to provide stringent proof of causation; and (4) the
regulations that prohibited the FDA from granting Reckitt’s requested relief were being
considered for amendment at the time the Petition was filed. Plaintiffs respond that questions of
fact preclude the Court from determining whether the Petition was objectively baseless at this
While the FDA did not dismiss Reckitt’s Citizen Petition outright as baseless and having
been submitted purely for the purpose of delay, § 355(q)(1)(E) does not require such an action.
It states that the FDA may deny a petition at any point based on a finding of frivolousness, but it
does not require summary denial. Thus, I cannot assume that the Petition must have merit
simply because the FDA did not exercise its right to dismiss it outright. Moreover, upon denying
the Citizen Petition, the FDA referred Reckitt to the FTC, and noted that the timing of Reckitt’s
activities with announcing the withdrawal of Suboxone tablets and the filing of the Citizen
Petition “given its close alignment with the period in which generic competition for [that]
product was expected to begin, cannot be ignored.” (DP Compl., Ex. G, pp. 15-16.)
The FDA acknowledged in its ruling that it had no authority to grant much of Reckitt’s
requested relief. (See supra p. 8.) The FDA cannot require ANDA filers to mimic non-approved
labeling and REMS materials in order to obtain approval, due to 21 U.S.C. § 355(j)(4)(G) and 21
C.F.R. § 314.127(a)(7). (See DP Compl., Ex. G., p. 12 (“The FD&C Act requires that labeling
for an ANDA be the same as the labeling ‘approved for the listed drug’”).)13 Additionally,
despite Reckitt’s request that the FDA investigate why Suboxone tablets had been withdrawn
While the FDA did state that it “welcomes and encourages sponsors to utilize unit-dose
packaging,” it also stated “we do not believe the data at this time support refusing to approve
applications that lack such packaging.” (DP Compl., Ex. G., p. 14.) Reckitt tries to argue that
based on this “encouragement” some of its relief was granted. I disagree with that assertion.
from the market, Reckitt was continuing to sell the product at that time. (Id. at pp. 14-15.)
Finally, the FDA determined that Reckitt did not provide evidence that the measures it sought to
impose caused any decline in accidental pediatric exposures. Indeed, the study Reckitt submitted
in support of its Petition “acknowledged that the impact of education interventions and
packaging on the decline in pediatric exposure was not evaluated, and that definitive conclusions
about these measures could not be reached.” (Id. at p. 9.)
In short, the FDA denied all of Reckitt’s requested relief. Much of the relief sought was
not even available to the FDA to grant, and Reckitt sought an investigation of its own reasons for
withdrawing Suboxone tablets at a time when the tablets remained on the market. As such,
Plaintiffs have plausibly pleaded that the Petition was objectively baseless in that no reasonable
litigant could have realistically expected success on the merits. I also find that Plaintiffs have
adequately alleged that Reckitt had the subjective intent to interfere with the business of a
competitor through the use of the petitioning process.
2. Have Plaintiffs Established an Antitrust Injury Regarding the Citizen
I next consider Reckitt’s argument that the filing of a Citizen Petition did not cause
antitrust injury. 21 U.S.C. § 355(q)(1)(A) states that the Secretary shall not delay approval of an
NDA or ANDA because of a Citizen Petition unless “the Secretary determines, upon reviewing
the petition, that a delay is necessary to protect the public health” and that “[c]onsideration of the
petition shall be separate and apart from review and approval of any application.”
Plaintiffs have alleged that despite this statutory framework, delays still occur and did
occur in this instance. Reckitt responds that Plaintiffs’ failure to articulate that the FDA violated
21 U.S.C. § 355(q)(1)(A) in the complaints is fatal to their claim.
Reckitt also presents
documents subject to judicial notice showing that the FDA approved the Generics’ ANDAs ten
days after the last amendment was submitted, indicating that the amendments were the reason for
any delays in ANDA approval, not the Citizen Petition. Finally, Reckitt presents an FDA ruling
on a citizen petition filed by Novartis Pharmaceuticals Corporation, where the FDA noted that
the petition lacked merit and had been responsible for a 25-day delay in the approval of ANDAs.
(Reckitt Mot. to Dismiss DP Compl., Ex. D, p. 12 (“We note that the 25-day delay in approval of
the ANDAs was entirely the result of the timing of Novartis’s Petition, rather than its merits”).)
Reckitt argues that the lack of any such comment in the FDA’s ruling here demonstrates that it
did not cause a delay.
I find that the complaints plausibly allege that the Citizen Petition caused antitrust injury
by delaying Generic entry into the market. The complaints state that Reckitt filed the Citizen
Petition for the purpose of delaying Generic competition, and but for the filing of the Citizen
Petition, “competitors would have begun marketing generic version of Suboxone well before
they actually did.” (DP Compl. ¶¶ 189-90.) They further allege that, despite the enactment of
§ 355(q)(1)(A), “a branded firm may still be able to delay generic approval while the FDA
considers whether the relevant Citizen Petition implicates issues of public health, regardless of
whether the petition actually does or not, and regardless of whether the petition is [a] sham or
not.” (Id. at ¶ 72.) The combination of these two allegations indicates that the FDA violated 21
U.S.C. § 355(q)(1)(A). To dismiss a claim for not using that exact language would be to place
form over substance.
Furthermore, I find that the Novartis petition presented by Reckitt actually supports
Plaintiffs’ argument. The FDA clearly stated in its ruling that delays still occur despite the
mandate of 28 U.S.C. § 355(q)(1)(A). As to Reckitt’s argument that any delays in approval of
the ANDA were due to amendments made by the Generics themselves, this is a classic factual
issue that is properly determined by a fact finder.
For the reasons stated above, I conclude that Plaintiffs have sufficiently pleaded an
antitrust injury, and accordingly, Reckitt’s motion to dismiss Counts IV and V of the Direct
Purchasers’ complaint is denied.
E. Count I – Unlawful Maintenance of Monopoly Power Through an Overarching
Scheme to Prevent or Delay Generic Competition
Reckitt argues that Plaintiffs cannot combine multiple unsuccessful claims to state one
overarching successful claim. However, as I find that three out of the four claims discussed
above will survive the motion to dismiss, I need not address this argument. Reckitt’s motion will
thus be denied as to Count I of the Direct Purchasers’ complaint.
Overview – The End Payors’ Complaint and Reckitt’s Motion to Dismiss
The facts alleged in the End Payors’ complaint are largely indistinguishable from those
found in the Direct Purchasers’ complaint. However, in contrast to the Direct Purchasers, the
End Payors raise the following claims: (1) monopolization and monopolistic scheme under state
law (listing 29 jurisdictions) (“Count I”); (2) attempted monopolization under state law (listing
29 jurisdictions) (“Count II”); (3) unfair and deceptive trade practices under state law (listing 28
jurisdictions) (“Count III”); (4) injunctive and declaratory relief under § 16 of the Clayton Act
for Reckitt’s violations of § 2 of the Sherman Act (“Count IV”); and (5) unjust enrichment under
state law (listing 49 jurisdictions) (“Count V”).
In addition to attacking each of the claims brought by the End Payors for failure to state a
claim, Reckitt also argues that numerous state law claims should be dismissed for lack of Article
III standing as well as antitrust standing and conflict of laws. I will address these arguments in
G. Do the End Payors Have Article III Standing?
Constitutional standing under Article III requires the following elements: (1) “an injuryin-fact that is concrete and particularized and actual or imminent, as opposed to conjectural or
hypothetical”; (2) “a causal connection between the injury and the conduct complained of”; and
(3) “it must be likely, as opposed to merely speculative, that the injury will be redressed by a
favorable decision.” Edmonson v. Lincoln Nat. Life Ins. Co., 725 F.3d 406, 414-15 (3d Cir.
2013) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992)). In addition to these
immutable requirements of Article III, “the plaintiff generally must assert his own legal rights
and interests, and cannot rest his claim to relief on the legal rights or interests of third parties.”
Miller v. Nissan Motor Acceptance Corp., 362 F.3d 209, 221 (3d Cir. 2004) (quoting Trump
Hotels & Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 485 (3d Cir. 1998)).
“That a suit may be a class action . . . adds nothing to the question of standing, for even
named plaintiffs who represent a class must allege and show that they personally have been
injured, not that injury has been suffered by other, unidentified members of the class to which
they belong and which they purport to represent.” Lewis v. Casey, 518 U.S. 343, 357 (1996)
(quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n.20 (1976)). “[E]ach claim
must be analyzed separately, and a claim cannot be asserted on behalf of a class unless at least
one named plaintiff has suffered the injury that gives rise to that claim.” Griffin v. Dugger, 823
F.2d 1476, 1483 (11th Cir. 1987).
Although the End Payors have brought claims under the laws of forty-eight states and
two territories, they reside in only seven of these states: Alabama, Illinois, Massachusetts,
Michigan, Minnesota, New York and Pennsylvania. (EP Compl. ¶¶ 102-10.) These End Payors
allege that they made purchases or reimbursed customers for Suboxone in only ten additional
states: Alaska, California, Florida, Iowa, Kentucky, Mississippi, Missouri, New Jersey, Nevada
and Wisconsin.14 (Id.) The complaint also notes that Reckitt is located in Virginia, and is
alleged to have engaged in many of the actions leading to these claims in that state. (Id. at ¶ 11214.)
Reckitt argues that the named End Payor Plaintiffs have not been injured, and thus lack
standing to assert claims, in the remaining thirty-two states and territories.15 The End Payors do
not dispute that the nine named End Payor Plaintiffs do not reside in and did not suffer a
financial injury in those thirty-two states. They urge, however, that the initial inquiry should be
whether they have standing to bring any state antitrust, consumer protection, or unjust
enrichment claim. Then, once general standing is established, the End Payors argue that they
should be allowed to pursue the claims of absent class members who may have suffered an injury
in other states. According to the End Payors, the question of whether they prosecute claims
brought on behalf of class members under the law of other states should be decided as a class
certification issue under Federal Rule of Civil Procedure 23, not as a matter of Article III
Reckitt relies heavily upon In re Wellbutrin XL Antitrust Litigation, 260 F.R.D. 143
(E.D. Pa. 2009), where the Honorable Mary A. McLaughlin answered the exact question at issue
here—“whether the Court should consider the named plaintiffs’ standing to bring the claims
The End Payors’ customers are also alleged to have made purchases in Ohio. However, this is
irrelevant for the purposes of my analysis because no claims have been brought under Ohio law.
While Reckitt asserts that the End Payors’ claims under Virginia law should be dismissed for
lack of standing, it later argues that under conflict of laws principles the End Payors “can only
assert claims under the laws of Virginia or their residence” and advocates applying Virginia law.
(Reckitt Mot. to Dismiss EP Compl., pp. 8, 10.) I find that the End Payors’ allegations that
Reckitt engaged in wrongful, anticompetitive conduct in Virginia is sufficient to establish
standing in that state.
asserted under each individual state’s law or should wait until the class certification stage to
make such an assessment.” Id. at 151. Judge McLaughlin determined that standing was a
threshold inquiry that must be addressed prior to class certification,16 reasoning that the
. . . would allow named plaintiffs in a proposed class action, with no injuries in
relation to the laws of certain states referenced in their complaint, to embark on
lengthy class discovery with respect to injuries in potentially every state in the
Union. At the conclusion of that discovery, the plaintiffs would apply for class
certification, proposing to represent the claims of parties whose injuries and
modes of redress they would not share. That would present the precise problem
that the limitations of standing seek to avoid.
Id. at 155. Judge McLaughlin ultimately concluded that the plaintiffs, end payor health and
welfare funds, had standing to bring claims under the laws of the states where the plaintiffs
themselves were located and states where the plaintiffs’ members had purchased Wellbutrin. Id.
at 156-57. However, all other state law claims were dismissed for lack of standing. Id. at 158. I
agree with Judge McLaughlin’s reasoning.
The End Payors attempt to distinguish Wellbutrin, arguing that the question is not one of
standing but instead a question of representativeness under Rule 23, and therefore a ruling on this
issue is premature. The End Payors rely upon In re Nexium (Esomeprazole) Antitrust Litigation,
Wellbutrin reflected on two Supreme Court cases, Amchem Products, Inc. v. Windsor, 521
U.S. 591 (1997) and Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), in which the Supreme
Court considered the propriety of class certification immediately prior to assessing Article III
standing. However, Wellbutrin found these cases to be distinguishable. In Amchem and Ortiz
the Supreme Court had been asked to determine the standing of potential class members as
opposed to the standing of the named plaintiffs. Further, in Amchem and Ortiz, a finding that
class certification was improper would have negated any need to determine standing, making
class certification “logically antecedent” to the Article III issue. Wellbutrin, 260 F.R.D. at 15354. Indeed, “[t]o rule on the issue of standing at that point in the case would have required the
Court to make a determination as to the standing of persons who were not actually parties to the
case, but who were only proposed parties to the case.” Id. at 153. Therefore, for these additional
reasons, I agree with the analysis in Wellbutrin finding that Amchem and Ortiz are
distinguishable, and that class certification is not logically antecedent to standing in this case.
968 F. Supp. 2d 367 (D. Mass. 2013), where the court determined that once the named plaintiffs
had established that they had suffered an injury due to overpayments from the lack of generic
competition, the standing inquiry ended. The court determined that after that point, whether the
named plaintiffs could raise the claims of the class it purports to represent should be determined
under Rule 23 at the class certification stage.
Id. at 404-05; see also In re Chocolate
Confectionary Antitrust Litig., 602 F. Supp. 2d 538, 579-80 (M.D. Pa. 2009).17
The majority of the other cases cited by the End Payors generally involve situations
where a named plaintiff has suffered an injury that established standing to sue under a particular
law—for example, Title VII—and the court considered whether the named plaintiffs’ claims
were sufficiently similar to the claims of potential class members under the same law. See
Goodman v. Lukens Steel Co., 777 F.2d 113, 122 (3d Cir. 1985); see also Gratz v. Bollinger, 539
U.S. 244, 265 (2003) (claims of named plaintiff and potential class brought under the equal
protection clause). The named plaintiffs in those cases clearly suffered an injury that could be
redressed by the statute or constitutional amendment invoked in the complaint. That is not the
case here, where none of the named End Payor Plaintiffs have suffered an injury that may be
redressed by the law of thirty-two of the fifty jurisdictions cited.
The fact that this is a class action should not change the analysis “for even named
plaintiffs who represent a class must allege and show that they personally have been injured, not
that injury has been suffered by other, unidentified members of the class to which they belong
The End Payors also cite to this Court’s decision in King Drug Co. of Florence, Inc. v.
Cephalon, Inc., 702 F. Supp. 2d 514 (E.D. Pa. 2010), arguing that I previously rejected the
reasoning of Wellbutrin. However, in Cephalon, I did not need to reach the question at issue
here—whether the named end payor plaintiffs had standing to assert state law claims on behalf
of absent class members. The named end payor plaintiffs in Cephalon had reimbursed
customers, and thus had standing, in every jurisdiction in which they had brought a claim. Id. at
and which they purport to represent.” Lewis, 518 U.S. at 357 (quoting Simon, 426 U.S. at 40
n.20). Since “each claim must be analyzed separately, and a claim cannot be asserted on behalf
of a class unless at least one named plaintiff has suffered the injury that gives rise to that claim,”
Griffin, 823 F.2d at 1483, the claims brought under the laws of these thirty-two different states
and territories will be dismissed for lack of Article III standing.18
H. Do Conflict of Laws Principles Require Additional State Law Claims to Be
Reckitt further argues that while conflict of laws principles allow the End Payor Plaintiffs
to assert claims under the laws of Virginia (Reckitt’s “home state”) or the seven “home states” of
the named End Payors, claims cannot be raised under the law of states where Suboxone was
purchased (“purchase states”).
Reckitt acknowledges that the law within this circuit and
elsewhere is in considerable disarray.
However, it urges that classic choice of laws
considerations—i.e. the location of the injury, the conduct causing the injury, the domicile of the
parties, and the center of the relationship between the parties—would require applying the “home
Accordingly, the antitrust claims brought under the laws of the following states and territories
are dismissed: Arizona, District of Columbia, Kansas, Maine, Nebraska, New Hampshire, New
Mexico, North Carolina, North Dakota, Oregon, Puerto Rico, Rhode Island, South Dakota,
Tennessee, Utah, Vermont and West Virginia. The End Payors have also voluntarily withdrawn
their antitrust claims under Illinois, Missouri and New York law. (See EP Resp., p. 34 n.29.)
The consumer protection claims under the laws of the following states and territories are also
dismissed: Arkansas, Arizona, District of Columbia, Idaho, Kansas, Maine, Nebraska, New
Hampshire, New Mexico, North Carolina, North Dakota, Oregon, Rhode Island, South Dakota,
Tennessee, Utah, Vermont and West Virginia.
Finally, the unjust enrichment claims brought under the laws of the following states and
territories are dismissed: Arkansas, Arizona, Colorado, Connecticut, Delaware, District of
Columbia, Georgia, Hawaii, Idaho, Kansas, Louisiana, Maryland, Maine, Montana, Nebraska,
New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Rhode Island,
South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia
state approach.” This approach allows plaintiffs to bring state law claims where the plaintiffs
and/or the defendants reside.
The End Payors respond that both the state where the overcharge was incurred and the
state where the End Payors reside have an interest in compensating the victims of the
overcharges. They point to case law where an international plaintiff was permitted to sue under
the Sherman Act when the overcharge was incurred within the United States. See United States
v. Aluminum Co. of Am., 148 F.2d 416, 443 (2d Cir. 1945) (“it is settled law . . . that any state
may impose liabilities, even upon persons not within its allegiance, for conduct outside its
borders that has consequences within its borders which the state reprehends”). Therefore, they
stress that where the overcharge is incurred is dispositive.
A number of cases within this district have determined that end payor plaintiffs have
standing and are able to state a claim under the laws of states in which they reside, as well as the
states where they have reimbursed consumers. Cephalon, 702 F. Supp. 2d at 538 (end payors’
“injuries would be redressed by a favorable determination under the laws of the states where
their members purchased Provigil”); Wellbutrin XL, 260 F.R.D. at 156-57 (“plaintiffs’ claims
have clear connection to the states where plaintiffs themselves are located and the states where
their members made purchases of Wellbutrin XL”). While most cases have considered whether
plaintiffs have standing to assert claims in home states or purchase states, and have not framed it
as a conflict of laws analysis, some courts have made statements that can provide guidance. For
example, in Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC,
263 F.R.D. 205 (E.D. Pa. 2009), the court commented:
Given the fact that the alleged injury occurred in each of the fifty states, and given
each state’s strong interest in protecting its own consumers (but a far weaker
interest in protecting consumers from other states), it is clear . . . that the law of a
particular state will govern any overcharge injury arising in that state.
Id. at 211 n.12; see also In re Relafen Antitrust Litig., 221 F.R.D. 260, 277 (D. Mass. 2004) (“the
Court considers the more significant contact in this context to be the location of the injury—that
is, the location of the sales to the end payor plaintiffs”).
The Restatement (2d) of Conflicts of Laws advises that courts should consider “the basic
policies underlying the particular field of law.” State laws that allow indirect purchasers to assert
antitrust claims aim to protect consumers within its borders. See In re Relafen, 221 F.R.D. at
277 (“the primary aim of antitrust and consumer protection laws generally—and those of indirect
purchaser states particularly—is compensating consumers”). Each overpayment made by a
consumer, or reimbursed by a Health and Welfare Plan, is a discrete injury that the state antitrust
laws were designed to redress. Therefore, I find that the End Payors may assert claims under the
laws of both home states and purchase states.19
Have the End Payors Stated a Claim Under State Antitrust Law?20
Reckitt adopts the arguments raised in their motion to dismiss the Direct Purchasers’
complaint and asserts that such arguments apply to the End Payors’ state antitrust claims. For
the reasons explained above, I will not dismiss the End Payors’ antitrust claims on those
The End Payors have identified the following states as either “home states” or “purchase
states”: Alabama, Alaska, California, Florida, Illinois, Iowa, Kentucky, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Nevada, New Jersey, New York, Pennsylvania and
Wisconsin. (EP Compl. ¶¶ 102-15.) Claims under Virginia law may also proceed as Virginia is
Reckitt’s home state—the state where much of Reckitt’s anticompetitive conduct is alleged to
have been carried out.
Reckitt argues that the End Payors’ claims for monopolization under Florida and
Massachusetts law must be dismissed because these states do not permit antitrust claims by
indirect purchasers. In the same vein, Reckitt argues that California antitrust law does not
recognize a claim for monopolization. A review of the statutes cited in the End Payors’
complaint demonstrates that the monopolization and attempted monopolization claims brought in
Counts I and II have been brought under the Consumer Protection Laws of Florida,
Massachusetts and California. Therefore, I will address whether the End Payors have stated a
claim under these statutes in the Consumer Protection Law section infra.
grounds. However, Reckitt also raises arguments specific to the state law claims. I address these
below in the order in which they were raised.
1. Antitrust Standing
Reckitt argues that the End Payors have failed to establish antitrust standing—a separate
analysis from Article III standing—under the standards articulated in Associated General
Contractors of California, Inc. v. California State Council of Carpenters (“AGC”), 459 U.S. 519
In AGC, the Supreme Court limited federal antitrust standing, recognizing that
“Congress did not intend to allow every person tangentially affected by an antitrust violation to
maintain an action to recover threefold damages for the injury to his business or property.” Id. at
535 (quoting Blue Shield of Va. v. McCready, 457 U.S. 465, 477 (1982)). The AGC factors for
antitrust standing are as follows: (1) the nature of the plaintiff’s alleged injury, including the
status of the plaintiff as a consumer or competitor in the relevant market; (2) the directness of the
claimed injury; (3) whether there is a more direct victim; (4) the complexity of apportioning
damages; and (5) risks of duplicative recovery. Id. at 538-45. Reckitt asserts that most of the
states under which the End Payors have brought suit have adopted the AGC factors for
application to its state antitrust laws either by express judicial decisions or by the incorporation
of federal decisions interpreting federal antitrust laws.21
Reckitt attaches exhibits to its motion that identify cases and statutes from each of the relevant
state jurisdictions in support of all of Reckitt’s state-specific arguments. The End Payors argue
that this appendix is improper for exceeding previously ordered page limits. This argument was
the subject of a motion to strike, wherein the End Payors argued that Reckitt had nearly doubled
its page limit by attaching exhibits filled with authority and legal argument. (Doc. No. 61.)
Reckitt responded that the tables were for the convenience of the Court and are routinely utilized
in this type of litigation where numerous state statutes are at issue. Reckitt points out that it had
previously consented to an increase in the page limit of the End Payors’ response in order to
allow them to more fully address these state-by-state arguments. (Doc. No. 62.) The motion to
strike was denied, although I noted that “[s]hould the Court conclude that the numerous exhibits
AGC followed the Supreme Court’s decision in Illinois Brick Co. v. Illinois, 431 U.S.
720 (1977), where the Supreme Court determined, based on principles of prudential standing,
that the federal antitrust statutes do not permit indirect purchasers to sue for damages. To allow
such suits, the Supreme Court feared, would create the risk of multiple liability for defendants,
hopelessly complex damages calculations, and increases in the cost of antitrust litigation. Id. at
730-32, 737-44. Following Illinois Brick, the Supreme Court further limited the class of persons
who could sue under the federal antitrust laws by laying out the antitrust standing factors
identified above in AGC. The majority of the state antitrust laws under which the End Payors
have brought their claims have passed Illinois Brick repealer statutes, which allow indirect
purchasers to bring antitrust claims for damages under state law.
Upon review of the precedent cited by the parties, it appears that some states have
explicitly adopted the AGC factors and some have not. Compare Lorix v. Crompton Corp., 736
N.W.2d 619, 627-29 (Minn. 2007) (explicitly rejecting application of the AGC factors to
Minnesota’s antitrust law) with Southard v. Visa U.S.A. Inc., 734 N.W.2d 192, 198-99 (Iowa
2007) (adopting the AGC factors in analyzing Iowa antitrust law and finding lack of antitrust
standing due to remoteness of injury). The majority of the states, however, are unclear on this
issue. Despite these inconsistencies, I need not go through the process of identifying which
filed by Defendant along with its Rule 12 motions are improper, those exhibits will not be
considered.” (Doc. No. 66.)
While these tables of authority do contain legal argument and thus exceed the previouslyordered page limit, the additional pages were likely necessary to address claims raised by the
End Payors from nearly every state in the country. As the End Payors were provided an
additional twenty pages to respond to Reckitt’s motion, which allowed them to identify authority
from all of the relevant jurisdictions, there has been no prejudice to the End Payors. Therefore, I
will consider Reckitt’s exhibits.
states have adopted the AGC factors and which have not because, in any event, I find that the
End Payors have satisfied the standards for antitrust standing.
Regarding the first factor—the nature of plaintiff’s alleged injury, including the status of
the plaintiff as a consumer or competitor in the relevant market—Reckitt argues that none of the
End Payor Plaintiffs clearly pleads that it is a purchaser of Suboxone, and therefore is neither a
purchaser, nor a competitor of Reckitt. However, the complaint clearly states that the End
Payors “purchased and/or provided reimbursement” to its members for Suboxone. Other courts
have found that reimbursement and/or purchases of the product by a Health and Welfare Fund
can satisfy the first factor. See In re K-Dur Antitrust Litig., 338 F. Supp. 2d 517, 543 (D.N.J.
The End Payors argue that the second factor, directness of the injury, has minimal weight
when analyzed under state law, where the state allows claims by indirect purchasers. While this
is a valid point, I must note that antitrust standing is not unlimited, even in states that allow suits
by indirect purchasers. For example, in Owens Corning v. R.J. Reynolds Tobacco Co., 868 So.
2d 331 (Miss. 2004), the plaintiff, a former producer of asbestos materials, brought antitrust
claims against several tobacco companies, seeking to recoup money paid in judgments to persons
suffering from lung disease stemming from the use of both asbestos and tobacco products. Id. at
334-36. The Mississippi Supreme Court affirmed the grant of summary judgment on claims
brought under Mississippi’s antitrust law, holding that the injury was too attenuated. Id. at 344.
Another example of these limitations can be found in what the parties have referred to as
the “Visa” cases. In these cases, Visa and Mastercard were alleged to have forced stores that
accepted their credit cards to also accept Visa and Mastercard debit cards through an illegal tying
scheme. The debit card transactions resulted in inflated fees being charged to the stores. The
stores then proceeded to raise the prices of their products, even for customers who purchased
items with cash or check. The plaintiffs were the consumers who had paid inflated prices at the
store. Antitrust claims in these cases were often dismissed for remoteness of injury, as the
consumers had not directly engaged in any business with, nor were they competitors of, Visa and
Mastercard. See, e.g., Southard, 734 N.W.2d at 198-99; Stark v. Visa U.S.A. Inc., 2004 WL
1879003, at *4 (Mich. Cir. Ct. July 23, 2004).
While these cases make clear that directness of injury must be considered in states with
Illinois-Brick repealer statutes, I find that the factor must either carry significantly less weight or
directness must be analyzed more generously than under federal law. It would be inconsistent
for a state to allow indirect purchasers to bring antitrust claims, only for the courts to cursorily
dismiss those claims on antitrust standing grounds simply because they have been brought by
indirect purchasers. See Lorix, 736 N.W.2d at 629 (remarking that it appears inconsistent to
repudiate Illinois Brick and invite indirect purchaser suits “only for courts to dismiss those suits
on the pleadings based on the very concerns that motivated Illinois Brick”).
The End Payors also point out that they have purchased the product and/or provided
reimbursement to their members who have purchased the product. This is not the situation in the
Visa cases or Owens Corning where there are numerous links in the causal chain. The End
Payors claim that they were overcharged when purchasing Suboxone due to the manufacturer’s
monopolization. These allegations are sufficiently direct to satisfy the second factor in states
that allow indirect purchasers to bring antitrust claims.
For the reasons just discussed, the third factor—whether there is a more direct victim—
must also carry little weight in states that allow suits to be brought by indirect purchasers.
“[S]trict application of this factor, in the context of indirect purchasers, would always caution
against standing, an outcome incompatible with the purpose of Illinois Brick repealer statutes.”
D.R. Ward Constr. Co. v. Rohm & Haas Co., 470 F. Supp. 2d 485, 503 (E.D. Pa. 2006).
Finally, as to damages, the Third Circuit has been reluctant to grant motions to dismiss
based on speculative or complex damages. See In re Lower Lake Erie Iron Ore Antitrust Litig.,
998 F.2d 1144, 1169 (3d Cir. 1993) (“we do not hold that litigation must be avoided solely
because it might be difficult to ascertain damages”). The damages in the present action allegedly
stem from overcharges due to Reckitt’s scheme to keep the Generics from competing with its
product. These damages do “not appear incapable of accurate calculation” such that the End
Payors would not have standing. Id. As such, I conclude that, even applying the AGC factors,
the End Payors have standing to bring antitrust claims under the state laws that have passed
Illinois Brick repealer statutes.
2. Nexus to Intrastate Commerce
Reckitt further argues that the End Payors fail to plead a sufficient nexus between
Reckitt’s alleged antitrust violations and intrastate commerce under the antitrust laws of
Mississippi and Nevada. Plaintiffs do not dispute the need for this nexus, and respond that the
following portion of their amended complaint provides sufficient facts to satisfy the intrastate
Reckitt’s anticompetitive conduct occurred in part in trade and commerce within
the states set forth herein, and also had substantial intrastate effects in that, inter
alia, retailers within each state were foreclosed from offering cheaper generic
Suboxone to end-payors inside each respective state. The foreclosure of generic
Suboxone directly impacted and disrupted commerce for end-payors within each
state, who were forced to pay supracompetitive prices.
(EP Compl. ¶ 152.)
Courts have found that allegations more general than these satisfy the intrastate
commerce nexus requirement. See In re Digital Music Antitrust Litig., 812 F. Supp. 2d 390, 408
(S.D.N.Y. 2011) (nexus requirement satisfied where complaint alleged the defendants’ “conduct
was in a continuous and uninterrupted flow of intrastate and interstate commerce”) (quotation
marks omitted); see also In re Chocolate Confectionary Antitrust Litig., 602 F. Supp. 2d at 58082. The cases cited by Reckitt are distinguishable, in that the plaintiffs in those cases solely
alleged effects on interstate commerce. See In re Flonase Antitrust Litig., 610 F. Supp. 2d 409,
416 (E.D. Pa. 2009); California v. Infineon Techs. AG, 531 F. Supp. 2d 1124, 1155-58 (N.D.
Cal. 2007). Therefore, I do not find that dismissal of the Mississippi and Nevada antitrust claims
Have the End Payors Failed to State a Claim Under State Consumer
Reckitt argues that all of the remaining consumer protection claims brought under the
laws of California, Florida, Illinois, Massachusetts, Michigan, Minnesota, Missouri, Nevada,
New York, Pennsylvania and Virginia must be dismissed for a multitude of reasons. I address
each of these states’ consumer protection laws in turn.
With respect to California’s consumer protection law, Cal. Bus. & Prof. Code §§ 17200,
et seq., Reckitt simply argues that the End Payors have failed to demonstrate a nexus to intrastate
commerce. For the reasons stated in section III.I.2, supra, I disagree with Reckitt’s argument.
The End Payors have alleged that overcharges occurred in California, which is sufficient to
establish an intrastate nexus. See Meridian Project Sys., Inc. v. Hardin Constr. Co., LLC, 404 F.
Supp. 2d 1214, 1225 (E.D. Cal. 2005) (noting that a plaintiff must allege that either misconduct
While California’s antitrust law does not recognize unilateral conduct, as is alleged here,
Reckitt has not demonstrated that any such restriction exists as to California’s consumer
protection law. Therefore, I will allow California’s claims for monopolization and attempted
monopolization to proceed under California’s consumer protection law.
or injuries occurred intrastate). As this is Reckitt’s only argument to dismiss the End Payors’
claim under the California consumer protection law, this claim will survive.
The Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat.
§§ 501.201, et seq., prohibits “[u]nfair methods of competition, unconscionable acts or practices,
and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Fla. Stat.
Ann. § 501.204. Reckitt argues that the End Payors have failed to adequately plead fraud or
deceit to state a claim under Florida’s consumer protection law, especially in light of the
particularity required by Federal Rule of Civil Procedure 9(b). See In re Packaged Ice Antitrust
Litig., 779 F. Supp. 2d 642, 665 (E.D. Mich. 2011) (dismissing FDUTPA claims by indirect
purchasers for failure to plead fraud or deceit with particularity under Rule 9(b)). Particularity
requires that a plaintiff “plead the circumstances surrounding the alleged fraud in order to put the
defendant on notice of the precise misconduct at issue.” De Lage Landen Fin. Servs., Inc. v.
Viewpoint Computer Animation, Inc., 2009 WL 902365, at *7 (E.D. Pa. Apr. 1, 2009) (citing
Seville Indus. Mach. Corp. v. Southmost Mach. Corp., 742 F.2d 786, 791 (3d Cir. 1984)).
For the same reasons discussed above regarding the Direct Purchasers, the End Payors’
allegations are sufficient to satisfy the particularity requirements of Rule 9(b). Specifically, they
point to claims that Reckitt fabricated a safety issue regarding Suboxone tablets for the sheer
purpose of impairing generic competition and eliciting monopoly proceeds from consumers.
This false safety issue was then allegedly broadcast to the FDA, doctors, other industry
Although Florida’s antitrust law does not permit antitrust claims by indirect purchasers and has
adopted Illinois Brick, Florida courts have held that the Florida Deceptive and Unfair Trade
Practices Act does not have this same restriction. Mack v. Bristol-Myers Squibb Co., 673 So.2d
100, 110 (Fla. App. 1996). Therefore, I decline to dismiss the claims for monopolization and
attempted monopolization brought under the FDUTPA on Illinois Brick grounds.
participants, and the public in an effort to destroy demand for Suboxone tablets. Reckitt is also
alleged to have made misrepresentations in their Citizen Petition, which the End Payors claim
was submitted solely for the purposes of delay. (See EP Compl. ¶¶ 3, 24-35, 70-82.) The End
Payors provide numerous, specific reasons why Reckitt’s actions were false and deceptive.
Other cases have found that an allegedly fraudulent Citizens Petition submitted for the purposes
of delay could constitute deceptive conduct that would state a claim for violation of state
consumer protection laws. See, e.g., In re DDAVP Indirect Purchaser Antitrust Litig., 903 F.
Supp. 2d 198, 221-29 (S.D.N.Y. 2012). Therefore, I find that the End Payors have sufficiently
pleaded deception that satisfies the heightened pleading standard under Rule 9(b).
The Illinois Antitrust Act only permits the state’s Attorney General to bring a class action
on behalf of indirect purchasers. 740 Ill. Comp. Stat. § 10/7(2). The End Payors recognize this
prohibition, as they have withdrawn their claims under Illinois’ antitrust law. Courts in this
district have found that, in light of this prohibition, claims based on alleged antitrust violations
under Illinois’ consumer protection law must be dismissed. In re Flonase Antitrust Litig., 692 F.
Supp. 2d 524, 593 (E.D. Pa. 2010) (to allow the indirect purchaser plaintiffs to bring a claim for
antitrust conduct under Illinois’ consumer protection law “would constitute an end run around
the Illinois legislature’s determination”). I agree with this assessment and believe the End
Payors’ claims under the Illinois consumer protection law should be dismissed.
Section 11 of Massachusetts’ consumer protection law provides a claim for unfair or
deceptive trade practices between businesses, whereas § 9 provides a cause of action to
consumers. See Mass. Gen. L. Ch. 93A §§ 9, 11; Ciardi v. F. Hoffman-La Roche, Ltd., 762
N.E.2d 303, 308-09 (Mass. 2002). The state legislature has extended Illinois Brick’s prohibition
on suits by indirect purchasers to § 11 of Massachusetts’ consumer protection law, but not § 9.
Ciardi, 762 N.E.2d at 308-09; see also In re Auto. Parts Antitrust Litig., 2013 WL 2456612, at
*29 (E.D. Mich. June 6, 2013) (dismissing consumer protection claims brought by businesses
under § 11 due to Illinois Brick). Although the End Payors’ complaint is not clear as to whether
they are asserting a claim under § 9 or § 11, their brief implies § 11 would be the appropriate
avenue for their claim. The End Payors argue that a pre-suit demand, a requirement for § 9
claims, would “not apply to claims brought by businesses like Plaintiffs in this case.” (EP Resp.,
p. 47.) In any event, even if the End Payors did intend to invoke § 9, they acknowledge that they
did not satisfy the pre-suit demand requirement. See Entrialgo v. Twin City Dodge, Inc., 333
N.E.2d 202, 204 (1975) (“A demand letter listing the specific deceptive practices claimed is a
prerequisite to suit and as a special element must be alleged and proved”). Therefore, the End
Payors’ claims under Massachusetts’ consumer protection law will be dismissed.24
Reckitt argues that Michigan’s consumer protection law, Mich. Stat. Ann. §§ 445.901, et
seq., does not prohibit monopolization. While this statute does require intent to deceive, which
is not required to state a claim for monopolization, see In re Packaged Ice Antitrust Litig., 779 F.
Supp. 2d at 665-66, for the reasons stated above, the End Payors’ complaint pleads with
particularity that Reckitt employed fraudulent and deceptive means with the intent to deceive.
Reckitt further argues that claims under Michigan’s consumer protection law require a
plaintiff to demonstrate that it relied on such deceptive conduct when making a purchase. See
As previously noted, Massachusetts’ consumer protection law was cited as providing a cause
of action for the End Payors’ monopolization and attempted monopolization claims. These
claims will also be dismissed as barred by Illinois Brick.
Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, 737 F. Supp.
2d 380, 412-13 (E.D. Pa. 2010) (citing Mayhall v. A.H. Pond Co., Inc., 341 N.W.2d 268, 270
(Mich. App. 1983)) (dismissing claims under Michigan’s consumer protection law for failure to
plead that consumers relied upon misrepresentations and that reliance caused injury). Reliance
and causation may be satisfied under the Michigan consumer protection law by demonstrating
that plaintiffs purchased and consumed the product. See In re DDAVP, 903 F. Supp. 2d at 226
(citing Gasperoni v. Metabolife, Int’l Inc., 2000 WL 33365948, at *7 (E.D. Mich. Sept. 27,
2000)). Therefore, Reckitt’s motion is denied as to this claim.
Minnesota requires that the pleadings contain specific allegations of fraud or deceit that
comply with the heightened standard of Federal Rule of Civil Procedure 9(b). E-Shops Corp. v.
U.S. Bank Nat’l Ass’n, 795 F. Supp. 2d 874, 879 (D. Minn. 2011) (holding that Rule 9(b) applies
to the Minnesota Consumer Fraud Act, Minn. Stat. Ann. §§ 325F.68, et seq.). For the reasons
recited above, the End Payors have pleaded misrepresentations and deception with particularity
so as to survive a motion to dismiss.
Therefore, the claim under Minnesota’s consumer
protection law survives Reckitt’s motion.
Reckitt argues that the End Payors’ claim under Missouri’s consumer protection law
should be dismissed due to the state’s adoption of Illinois Brick. The End Payors point to
Gibbons v. J. Nuckolls, Inc., 216 S.W.3d 667 (Mo. 2007) for the proposition that Missouri law
does not prohibit their claim. In Gibbons, a consumer sued a car dealership and a wholesaler for
failure to disclose that the car he purchased had been in a prior accident. The court held that the
consumer may sue the wholesaler, even though direct contractual privity did not exist between
the parties. While this case does appear to support the assertion that Missouri allows indirect
purchasers to bring suit under its consumer protection law, Gibbons did not consider facts in the
antitrust context. The End Payors have failed to identify any cases where indirect purchasers
were permitted to bring claims under Missouri’s consumer protection law for antitrust injury. As
with Illinois, it would appear that allowing a claim under Missouri’s consumer protection law
would provide an end-run around the state’s prohibition of antitrust claims by indirect
purchasers. See Ireland v. Microsoft Corp., 2001 WL 1868946, at *1 (Mo. Cir. Jan. 24, 2001)
(dismissing claims under Missouri’s antitrust law and consumer protection statute due to Illinois
Brick). Therefore, the consumer protection claim under Missouri law will be dismissed.
Reckitt also argues that monopolization claims are not actionable under Nevada’s
consumer protection law, Nev. Rev. Stat. Ann. §§ 598.0903, et seq. However, that statute
prohibits deceptive trade practices, which includes “[k]nowingly making a false representation as
to the characteristics, ingredients, uses, benefits, alterations or quantities of goods or services for
Nev. Rev. Stat. § 598.0915.
For the reasons stated above, the End Payors have
sufficiently pleaded deceptive practices by Reckitt so as to state a claim under Nevada’s
consumer protection law. See In re DDAVP, 903 F. Supp. 2d at 226 (finding allegations of
fraudulent acts in the antitrust context stated a claim under Nevada’s consumer protection law).
9. New York
Reckitt also argues that the End Payors have failed to establish a nexus with intrastate
commerce as required by New York’s consumer protection law, N.Y. Gen. Bus. L. §§ 349, et
seq. As with California, the End Payors have pleaded that overcharges occurred in New York.
Therefore, I do not agree with Reckitt’s argument that this claim should be dismissed. See
Goshen v. Mutual Life Ins. Co. of N.Y., 774 N.E.2d 1190, 1195 (N.Y. 2002) (transaction in
which the consumer is deceived must take place within New York under § 349).
Reckitt further argues that the End Payors failed to adequately plead fraud or deceit
directed at consumers. Reckitt cites to In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143
(E.D. Pa. 2009), where the court held that the indirect purchasers were too far removed from the
allegedly fraudulent action—in that case, filing a sham Citizen Petition—to state a claim under
New York’s consumer protection law. The target of that deception, the court found, was the
FDA, not the indirect purchasers. Id. at 164. Here, however, in addition to the Citizen Petition
allegations, the End Payors have posited that Reckitt fabricated safety issues with Suboxone
tablets and targeted consumers, among others, in an effort to maintain a monopoly for Suboxone.
The End Payors are alleged to have either directly purchased or reimbursed their members—i.e.
consumers—for the product. Therefore, I find that the End Payors have successfully stated a
claim under New York’s consumer protection law.
Reckitt argues that the End Payors have failed to plead fraud or deception with
particularity under Pennsylvania’s consumer protection law, 73 Pa. Stat. Ann. §§ 201-1, et seq.
See In re K-Dur Antitrust Litig., 338 F. Supp. 2d at 548 (dismissing claim under Pennsylvania’s
consumer protection law for failure to adequately plead fraud). For the reasons stated above, I
disagree with Reckitt’s argument, and find that the End Payors have pleaded fraud with
Therefore, Reckitt’s motion will be denied as to Pennsylvania’s consumer
Reckitt argues that the End Payors’ claim under Virginia’s consumer protection law, Va.
Code Ann. § 59.1-196, should be dismissed because monopolization allegations are not
actionable under the state’s consumer protection laws. See In re New Motor Vehicles Canadian
Export Antitrust Litig., 350 F. Supp. 2d 160, 206-07 (D. Me. 2004). For the reasons discussed
above, the End Payors have sufficiently pleaded fraud and/or misrepresentations sufficient to
state a claim under Virginia’s consumer protection law.
K. Have the End Payors Stated a Claim for Unjust Enrichment?
“Generally speaking, in order to state a claim for unjust enrichment, a plaintiff must
allege (1) at plaintiff’s expense (2) defendant received [a] benefit (3) under circumstances that
would make it unjust for defendant to retain [the] benefit without paying for it.” In re K-Dur
Antitrust Litig., 338 F. Supp. 2d at 544 (citing RESTATEMENT OF RESTITUTION § 1 (1937)).
Reckitt presents two arguments as to why all of the End Payors’ unjust enrichment claims
should be dismissed. First, Reckitt argues that the End Payors failed to adequately identify the
state laws under which they assert such claims, and that failure to do so warrants dismissal. See
In re Auto. Parts Antitrust Litig., 2013 WL 2456612, at *31 (dismissing unjust enrichment
claims because plaintiffs pleaded general common law unjust enrichment without identifying
under which states they were bringing these claims); In re Wellbutrin XL, 260 F.R.D. at 167
(same). However, the End Payors’ complaint does allege which states’ unjust enrichment laws
were violated. Unlike the plaintiffs in the cases cited by Reckitt, here the End Payors invoked
the laws of all fifty states (except Ohio and Indiana) and the District of Columbia. Therefore, I
am not convinced that all of the End Payors’ unjust enrichment claims should be dismissed on
Reckitt’s second argument for complete dismissal of the unjust enrichment claims is that
the End Payors did not plead the specific elements of any state’s unjust enrichment law or the
factual allegations that support recovery under those laws. While it is true that the elements of
unjust enrichment vary state by state, “almost all states at minimum require plaintiffs to allege
that they conferred a benefit or enrichment upon defendant and that it would be inequitable or
unjust for defendant to accept and retain the benefit.” In re Flonase, 692 F. Supp. 2d at 541. The
facts set forth in the End Payors’ complaint allege that Reckitt obtained ill-gotten gains—that is,
monopoly profits unlawfully obtained. To the extent that a jurisdiction invoked by the End
Payors requires state-specific elements that have not been satisfied by these allegations, these
alleged deficiencies are addressed below.
Next, Reckitt contends that any and all “autonomous” unjust enrichment claims—claims
that are not derived from a violation of some other state law—must be dismissed. Unjust
enrichment claims can generally take one of two forms: (1) parasitic, which means it “arise[s]
from contracts, torts, or other predicate wrongs”; or (2) autonomous, where the unjust
enrichment claim alone “may also serve as independent grounds for restitution in the absence of
mistake, wrongdoing, or breach of contract.” In re New Motor Vehicles Canadian Export
Antitrust Litig., 350 F. Supp. 2d at 207-08 (citation omitted). As with the consumer protection
laws, courts have held that an autonomous unjust enrichment may not be used as an end-run
around a state’s prohibition against antitrust claims brought by indirect purchasers in accordance
with Illinois Brick.25 See id. at 207-10; In re Digital Music Antitrust Litig., 812 F. Supp. 2d at
The End Payors cite to Cephalon, 702 F. Supp. 2d at 539, for the proposition that this Court
has previously rejected the end-run argument with regard to unjust enrichment claims. However,
Illinois Brick and various states’ adoption of this limitation were not discussed in Cephalon. See
id. at 539-40.
413; In re Flonase, 692 F. Supp. 2d at 542. States that have adopted Illinois Brick and do not
provide a cause of action under either the states’ antitrust law or consumer protection law, are:
Illinois, Kentucky,26 Massachusetts, Missouri and New Jersey.27 Therefore, these autonomous
claims for unjust enrichment will be dismissed.
To the extent that Reckitt argues that other states do not allow a stand-alone claim for
unjust enrichment, I will address these states individually below.
With respect to Alabama’s unjust enrichment law, Reckitt first argues that because the
End Payors did not plead underlying antitrust or consumer protection claims under Alabama law,
the Alabama unjust enrichment claims must be dismissed. Reckitt does not cite to any Alabama
case law that states an unjust enrichment claim cannot stand on its own as an independent cause
of action. Therefore, I will not grant the motion on this ground.
Reckitt next argues that the End Payors failed to allege that they acted under a mistake of
fact or in misreliance on a duty, or that Reckitt engaged in any unconscionable conduct, as
required by Alabama law. See Matador Holdings, Inc. v. HoPo Realty Invs., LLC, 77 So.3d 139,
146 (Ala. 2011). Alabama courts define unconscionable conduct to include “fraud, coercion, or
abuse.” Id. at 146 (quoting Jordan v. Mitchell, 705 So.2d 453, 458 (Ala. Civ. App. 1997)). As
discussed previously, the End Payors have alleged that Reckitt engaged in unconscionable
conduct through fraud and that indirect purchasers relied upon this fraud, resulting in injury.
Therefore, the motion to dismiss the Alabama unjust enrichment claim is denied.
Arnold v. Microsoft Corp., 2001 WL 1835377, at *7 (Ky. Ct. App. Nov. 21, 2001) (applying
the holding of Illinois Brick to Kentucky’s antitrust law).
Sickles v. Cabot Corp., 877 A.2d 267, 275 (N.J. Super. App. Div. 2005) (“an indirect
purchaser is precluded from suing for antitrust violations under the [New Jersey Antitrust
The only argument raised as to Alaska is that unjust enrichment cannot be an
autonomous, stand-alone claim. In support of its argument, Reckitt cites to Alaska Sales &
Serv., Inc. v. Millet, 735 P.2d 743, 746 (Alaska 1987). However, Reckitt misreads this case.
The Millet court simply noted that unjust enrichment “is a prerequisite for the enforcement of the
doctrine of restitution” and noted that courts often “treat actions brought upon theories of unjust
enrichment, quasi-contract, contracts implied in law and quantum meruit as essentially the
same.” Id. at 746 n.6. It did not hold that unjust enrichment could not be an autonomous cause
of action. Therefore, Reckitt’s motion will be denied as to Alaska.
Reckitt argues that the claim for unjust enrichment under California law must be
dismissed because California does not recognize a cause of action for unjust enrichment. Courts
have recognized that there is inconsistent precedent within California as to whether a claim for
unjust enrichment is viable. See Baggett v. Hewlett-Packard Co., 582 F. Supp. 2d 1261, 1270-71
(C.D. Cal. 2007) (“California courts appear to be split on whether unjust enrichment can be an
independent claim or merely an equitable remedy”) (quotation marks omitted); compare Dunkel
v. eBay Inc., 2013 WL 415584, at *11 (N.D. Cal. Jan. 31, 2013) (“Simply put, there is no cause
of action in California for unjust enrichment”) (quotation marks and citations omitted) with
Peterson v. Cellco Partnership, 80 Cal. Rptr. 3d 316, 323-24 (Cal. App. 2008) (analyzing
whether plaintiff had stated a claim for unjust enrichment without finding that it was unavailable
under California law).
In the absence of clear authority on this issue, I find the analysis in Baggett to be
persuasive. Therein, the court noted that it was unclear whether unjust enrichment was a viable
cause of action in California, and in any event, found that courts seem particularly reluctant to
allow an unjust enrichment claim where the remedies available for plaintiff may be pursued
under other claims. Baggett, 582 F. Supp. 2d at 1271; see also Falk v. General Motors Corp.,
496 F. Supp. 2d 1088, 1099 (N.D. Cal. 2007). Here, the End Payors’ have brought a viable
claim for violation of California’s consumer protection law, and “the unjust enrichment claim
will add nothing to [their] available relief.” Baggett, 582 F. Supp. 2d at 1271. Therefore, I will
dismiss the unjust enrichment claim under California law.
Reckitt initially argues that because Florida does not permit antitrust claims by indirect
purchasers, the End Payors’ unjust enrichment claim must also be dismissed as an end-run
around this restriction. However, as discussed above, Florida does permit indirect purchasers to
bring claims under the state’s consumer protection law. Therefore, because there exists a viable
underlying cause of action, I do not agree with Reckitt’s argument. See Flonase, 692 F. Supp. 2d
However, I do find that Florida law requires that a benefit be conferred upon the
defendant directly in order to state a claim for unjust enrichment. See Extraordinary Title Servs.,
LLC v. Fla. Power & Light Co., 1 So.3d 400, 404 (Fla. 3d D.C.A. 2009) (affirming dismissal of
unjust enrichment claim for failure to demonstrate that a benefit was directly conferred on the
defendant); Am. Safety Ins. Serv., Inc. v. Griggs, 959 So.2d 322, 331 (Fla. 5th D.C.A. 2007)
(citing People’s Nat’l Bank of Commerce v. First Union Nat’l Bank of Fla., 667 So.2d 876, 879
(Fla. 3d D.C.A. 1996)) (“The plaintiffs must show they directly conferred a benefit on the
defendants”); Flonase, 692 F. Supp. 2d at 544 (citing Nova Info. Sys., Inc. v. Greenwich Ins.
Co., 365 F.3d 996, 1007 (11th Cir. 2004)) (“As best I can tell, Florida law is clear; it requires
that a plaintiff confer a direct benefit upon a defendant in order to state a claim for unjust
By virtue of being indirect purchasers, the End Payors cannot establish that they directly
conferred a benefit upon Reckitt. The facts pleaded in the End Payors’ complaint establish that
any overpayments for Suboxone were made to pharmacies, and the End Payors had no direct
contact with Reckitt. Therefore, I will grant Reckitt’s motion as to the End Payors’ Florida
unjust enrichment claim.
Reckitt first argues that the unjust enrichment claim arising under Iowa law must be
dismissed because the End Payors did not allege that they conferred a direct benefit on Reckitt.
However, the Supreme Court of Iowa has held that the benefits conferred to a defendant in an
unjust enrichment claim may be “direct or indirect, and can involve benefits conferred by third
parties.” State, Dep’t of Human Servs. ex rel. Palmer v. Unisys Corp., 637 N.W.2d 142, 155
(Iowa 2001). Instead of concentrating on the privity between the two parties, the “critical
inquiry is that the benefit received be at the expense of the plaintiff.” Id. Thus, I do not agree
with Reckitt’s first argument.
I note that some Florida precedent has not been entirely clear that the conferral of a direct
benefit is required. See Merkle v. Health Options, Inc., 940 So.2d 1190, 1199 (Fla. 4th D.C.A.
2006); Hillman Constr. Corp. v. Wainer, 636 So.2d 576, 577-78 (Fla. 4th D.C.A. 1994).
Although these cases allowed claims to proceed where there did not appear to be a direct benefit
conferred, at no point did the court make a clear statement that a direct benefit was not required.
Furthermore, the appellate courts’ reasoning in reversing the trial courts’ dismissals seemed to
focus on the trial courts improperly making factual determinations that a benefit was not
conferred, as opposed to adopting the factual allegations made in the complaint. I do not find
that these ambiguous rulings are sufficient to overcome the majority of Florida precedent that has
clearly and affirmatively held that a direct benefit is required for an unjust enrichment claim
under Florida law.
Next, Reckitt argues that the Iowa unjust enrichment claim should be dismissed because
the End Payors received the benefit of the bargain, citing to Smith v. Stowell, 125 N.W.2d 795,
800 (Iowa 1964). In Smith, the plaintiffs sold ten shares of stock to the defendant, and the
parties entered into an express contract where the plaintiffs reserved the option to repurchase the
shares from the defendant at a set price. Id. at 796. Years later, the plaintiffs sought to
repurchase the ten shares but also wanted thirty additional shares that had been awarded to the
defendant as a stock dividend. Id. The defendant was willing to sell the original ten shares at the
agreed upon price, but not the stock dividends. Id. at 800. The court held that “there can be no
such implied contract on a point fully covered by an express contract and in direct conflict
therewith.” Id. This case is clearly distinguishable from the present case, as there is no express
written contract between the parties. See In re Auto. Parts Antitrust Litig., 2014 WL 2993753, at
*29-30 (E.D. Mich. July 3, 2014) (distinguishing Smith due to the express written contract).
I also find that the sheer fact that the End Payors received medication in exchange for
money paid does not bar an unjust enrichment claim. Reckitt has not established that any
consideration exchanged for a benefit conferred defeats a claim for unjust enrichment. Instead,
the precedent indicates that courts inquire as to the “fairness” of the consideration, which would
appear to be a factual issue inappropriate for disposition in a motion to dismiss. See In re K-Dur
Antitrust Litig., 338 F. Supp. 2d at 545-46 (collecting cases considering the fairness or justness
of the bargain). The End Payors have alleged that although they received Suboxone in exchange
for their payments, they were forced to pay artificially inflated prices due to Reckitt’s wrongful
conduct. This is sufficient to state a claim for unjust enrichment under Iowa law.
Reckitt first argues that the End Payors’ unjust enrichment claim under Michigan law
should be dismissed because Michigan requires a showing of a direct benefit conferred on the
defendants. It primarily relies on A & M Supply Co. v. Microsoft Corp., 2008 WL 540883
(Mich. Ct. App. Feb. 28, 2008), and several other cases citing to A&M. See In re Refrigerant
Compressors Antitrust Litig., 2013 WL 1431756, at *25-26 (E.D. Mich. Apr. 9, 2013); In re
Aftermarket Filters Antitrust Litig., 2010 WL 1416259, at *2-3 (N.D. Ill. Apr. 1, 2010); In re
Potash Antitrust Litig., 667 F. Supp. 2d 907, 948-49 (N.D. Ill. 2009); Munson v. Countrywide
Home Loans, Inc., 2008 WL 5381866, at *9 (E.D. Mich. Dec. 17, 2008).
In A & M, the Michigan Court of Appeals affirmed the trial court’s dismissal of an unjust
enrichment claim due to the plaintiff’s failure to prosecute the case. 2008 WL 540883, at *1-2.
The court further noted that “even if the lower court had erred in dismissing a plaintiff’s action
for lack of progress, it was properly subject to dismissal on the merits.” Id. at *2. The court
reasoned that a direct benefit is required under Michigan unjust enrichment law and the plaintiff
failed to show a direct relationship between himself and the defendants. Id. However, the court
provided no precedent in support of its assertion.
I agree with the reasoning presented by a court in the Eastern District of Michigan. In re
Auto. Parts Antitrust Litig., 2014 WL 2993753, at *31. The In re Auto. Parts court found that A
& M is not persuasive or dispositive, largely because the language regarding a direct benefit
requirement was made in dicta. Id. The district court ultimately held that “Michigan law does
not require a benefit to be conferred directly by plaintiff to a defendant” and denied the
defendants’ motion to dismiss on this ground. Id.
Several Michigan courts have reached the same conclusion. See Kammer Asphalt Paving
Co. v. E. China Twp. Sch., 504 N.W.2d 635, 641 (Mich. 1993) (allowing an indirect benefit to
constitute unjust enrichment because of the close relationship between the parties); Morris
Pumps v. Centerline Piping, Inc., 729 N.W.2d 898, 904 (Mich. Ct. App. 2006) (finding the
defendant, a general contractor, liable for unjust enrichment where the defendant used materials
that the plaintiff had supplied to another subcontractor and did not pay the plaintiff for those
materials). Several federal courts interpreting Michigan law have also determined that unjust
enrichment does not require a direct benefit. See In re Static Random Access Memory (SRAM)
Antitrust Litig., 2010 WL 5094289, at *7 (N.D. Cal. Dec. 8, 2010) (“A claim for unjust
enrichment under Michigan law does not require that the plaintiff confer a direct benefit on the
defendant”); In re K-Dur Antitrust Litig., 2008 WL 2660783, at *10 (D.N.J. Mar. 19, 2008)
(holding that a plaintiff is not required to show a direct benefit while noting the inconsistency in
the case law); In re Cardizem CD Antitrust Litig., 105 F. Supp. 2d 618, 670-71 (E.D. Mich.
2000) (rejecting that “either privity or a directly conferred benefit is an essential element of an
unjust enrichment claim under” Michigan common law). Without a clear pronouncement from
the Michigan state courts, I will allow the End Payors’ unjust enrichment claim under Michigan
law to proceed. See Flonase, 692 F. Supp. 2d at 544 (“[T]here should be a clear statement from
the state’s courts that it has added” the direct benefit requirement).
Reckitt next argues that the End Payors received the benefit of the bargain. Reckitt cites
to two cases where the court of appeals dismissed unjust enrichment claims where the parties
negotiated an explicit contract, and both parties fulfilled their obligations under that contract. See
Isom v. NE Lots LLC, 2010 WL 143470, at *6 (Mich. Ct. App. Jan. 14, 2010); Russell v.
Zeemering, 2006 WL 2382511, at *5 (Mich. Ct. App. Aug. 17, 2006). Because there is no
explicit contract in this case, I find these cases to be distinguishable. Accordingly, Reckitt’s
motion to dismiss the unjust enrichment claims in Michigan will be denied.
Reckitt first argues that Minnesota requires a direct benefit to be conferred onto the
defendant in order to state a claim for unjust enrichment. The only authority it provides in
support of this assertion is Schumacher v. Schumacher, 627 N.W.2d 725, 729 (Minn. Ct. App.
2001). However, Schumacher does not state that a direct benefit is an essential element to an
unjust enrichment claim. There, the court found that “the claimant must show that another party
knowingly received something of value to which he was not entitled, and that the circumstances
are such that it would be unjust for that person to retain the benefit.” Id. at 729. I am not
convinced that Schumacher conclusively establishes that Minnesota law requires a direct benefit.
See In re Processed Egg Prods. Antitrust Litig., 851 F. Supp. 2d 867, 934-35 (E.D. Pa. 2012)
(finding that Minnesota does not have a “direct benefit” requirement).
Reckitt also argues that the End Payors received the benefit of the bargain. It cites one
case where the plaintiff, a college student who did not receive a degree upon paying tuition,
claimed the university was unjustly enriched. Zinter v. Univ. of Minn., 799 N.W.2d 243, 247
(Minn. Ct. App. 2011). The court rejected the argument, noting that what was bargained for was
tuition in exchange for classes, not tuition in exchange for a degree. Id. The case before me is
distinguishable. As described with regard to Iowa law, the fact that some consideration was
exchanged does not foreclose the End Payors’ claim. Instead, the operative question is whether
the bargain was just or fair. Therefore, I do not agree with Reckitt’s argument.
Lastly, Reckitt argues that the End Payors are barred from bringing unjust enrichment
claims when they have adequate legal remedies available, citing to Southtown Plumbing, Inc. v.
Har-Ned Lumber Co., Inc., 493 N.W.2d 137 (Minn. Ct. App. 1992). The court in Southtown
held that because the plaintiffs chose not to pursue the legal remedy available to them through a
mechanics lien, they were barred from then bringing an unjust enrichment claim. Id. at 140.
Reckitt seeks to use this case to show that unjust enrichment is always barred when a legal
remedy is available.
However, several courts applying Minnesota law have allowed
simultaneous pleadings for a legal remedy and unjust enrichment. See Daigle v. Ford Motor Co.,
713 F. Supp. 2d 822, 828 (D. Minn. 2010); LePage v. Blue Cross & Blue Shield of Minn., 2008
WL 2570815, at *8 (D. Minn. June 25, 2008); see also In re Levaquin Prods. Liab. Litig., 752 F.
Supp. 2d 1071, 1081 (D. Minn. 2010) (finding that Southtown only stands for the proposition
that a plaintiff who chooses not to pursue available legal remedies cannot recover for unjust
enrichment). Therefore, I will allow the Minnesota unjust enrichment claim to proceed.
Reckitt next argues that because the End Payors received the benefit of the bargain, the
Mississippi unjust enrichment claims should be dismissed. It cites to one case that discusses
unjust enrichment as it applies to third parties. Omnibank of Mantee v. United S. Bank, 607 So.
2d 76, 92-93 (Miss. 1992). There, the court held that the mere fact that a party is enriched does
not mean that he has been unjustly enriched, “in the absence of some misleading or wrongful
act.” Id. The court did not state that any consideration provided by the defendant for a benefit
precludes an unjust enrichment claim. Furthermore, Reckitt is alleged to have engaged in
wrongful, fraudulent acts. Therefore, I do not find Reckitt’s argument convincing.
Reckitt also argues that under Mississippi law, plaintiffs can only recover for unjust
enrichment when the payment was made by a mistake of fact. Reckitt points to the holdings of
two Mississippi Supreme Court cases. Willis v. Rehab Solutions, PLLC, 82 So.3d 583, 588
(Miss. 2012); Union Nat’l Life Ins. Co. v. Crosby, 870 So.2d 1175, 1180 (Miss. 2004). These
cases defined unjust enrichment as applying when one party mistakenly pays another party,
reasoning that the receiver should not be enriched at the expense of the giver. Id. While the
court did hold that “unjust enrichment applies when one party has mistakenly paid another
party,” Willis, 82 So. 3d at 388, Reckitt overstates the import of this holding. See In re Auto.
Parts Antitrust Litig., 2014 WL 2993742, at *34-35 (rejecting an identical argument as
construing Willis too broadly). In fact, after deciding Willis, the Supreme Court of Mississippi
found a claim for unjust enrichment was viable where there were no allegations of mistake, but
instead the defendant “knowingly solicited [the plaintiff] to enter into an unlawful contract” and
found it would be unconscionable to allow the defendant to retain those ill-gotten gains. Ground
Control, LLC v. Capsco Indus., Inc., 120 So.3d 365, 371 (Miss. 2013). Therefore, I do not agree
with Reckitt that Mississippi law requires plaintiffs to plead a mistake in order to state a claim
for unjust enrichment.
Reckitt’s only argument in support of its motion to dismiss the Nevada unjust enrichment
claim is that Reckitt provided consideration for any benefit conferred. For support, Reckitt cites
Bowyer v. Davidson, 584 P.2d 686, 687 (Nev. 1978). The Bowyer court found that because the
defendant provided the consideration that the parties had bargained for in their express contract,
he could not have been unjustly enriched. Id. As with Iowa, the facts in the present case are
distinguishable. Therefore, the End Payors’ unjust enrichment claim under Nevada law will
survive the motion to dismiss.
10. New York
With regard to the New York unjust enrichment claims, Reckitt argues that the End
Payors must demonstrate that a direct benefit was conferred upon the defendant. A review of
New York case law indicates that in order to state a claim for unjust enrichment, the relationship
between the plaintiff and the defendant, and thus the conferral of the benefit, must not be “too
attenuated.” See Mandarin Trading Ltd. v. Wildenstein, 16 N.Y.3d 173, 182-83 (N.Y. 2011)
(noting that an unjust enrichment claim will fail if the connection between the parties is too
Reckitt argues that this case is similar to Sperry v. Crompton Corp., 8 N.Y.3d 204 (N.Y.
2007), where the New York Supreme Court affirmed the dismissal of an unjust enrichment claim
because the conferral of the benefit was too attenuated. The plaintiffs in that case, purchasers of
tires, brought antitrust and unjust enrichment claims against the producer of chemicals used in
tire manufacturing. The plaintiffs alleged that the tire manufacturers, who had been overcharged
for the chemicals, passed along the overcharges to retailers, and by extension, consumers. Id. at
209. In the absence of a connection between the two parties, the court found that the unjust
enrichment claim could not survive. Id. at 215-16.
I agree with the court’s analysis in Waldman v. New Chapter, Inc., 714 F. Supp. 2d 398
(E.D.N.Y. 2010), which distinguishes Sperry. Waldman held that although an indirect purchaser
could not bring a claim against the producer of an ingredient used in a product, that did not
foreclose an indirect purchaser from pursuing an unjust enrichment claim against the
manufacturer of the product itself. Id. at 403-04 (citing Cox v. Microsoft Corp., 8 A.D.3d 39,
40-41 (N.Y. App. Ct. 1st Dept. 2004)). Accordingly, I do not find that the End Payors are too
attenuated from Reckitt so as to require dismissal of the unjust enrichment claim under New
Reckitt argues that the End Payors are barred from bringing an unjust enrichment claim
in Pennsylvania because that state does not allow indirect purchasers to bring antitrust claims
under Illinois Brick.
However, as opposed to simply barring claims brought by indirect
purchasers, Pennsylvania does not have a state antitrust statute at all. See XF Enterprises, Inc. v.
BASF Corp., 2000 WL 33155746, at *1 (Pa. Com. Pl. Ct. July 13, 2000). In any event, because
I have previously found that the End Payors have stated a claim for a violation of Pennsylvania’s
consumer protection law, I do not find that allowing an unjust enrichment claim would provide
an end-run around the Pennsylvania legislature’s determination. Accordingly, the End Payors’
unjust enrichment claim under Pennsylvania law will survive the motion to dismiss.
Reckitt initially argues that the End Payors cannot bring an autonomous unjust
enrichment claim. However, I have already found that the End Payors’ claim under Virginia’s
consumer protection law may proceed. Therefore, I disagree with Reckitt’s argument. For the
same reason, I disagree with Reckitt’s argument that to allow a claim for unjust enrichment in
Virginia would act as an end-run around the state’s prohibition of antitrust claims by indirect
purchasers. Therefore, the End Payors’ claim for unjust enrichment under Virginia law will
survive the motion to dismiss.
The only argument Reckitt provides in support of its motion to dismiss the unjust
enrichment claim arising under Wisconsin law is that Reckitt has already provided consideration
for any benefit conferred. It cites to a Wisconsin Court of Appeals case where a subcontractor
was barred from bringing an unjust enrichment claim against an owner that had already paid a
general contractor for the services provided. Tri-State Mech., Inc. v. Northland Coll., 681
N.W.2d 302, 305-06 (Wis. Ct. App. 2004). Similar to my reasoning under Florida law, the
present case is distinguishable. Tri-State did not state that any consideration exchanged would
nullify a claim for unjust enrichment. Therefore, the motion to dismiss the unjust enrichment
claims under Wisconsin law is denied.
L. Should the End Payors’ Claim for Injunctive Relief Be Dismissed?
Reckitt argues that the End Payors’ claim for injunctive relief under § 16 of the Clayton
Act should be dismissed as it is procedurally and substantively deficient. First, Reckitt asserts
that because the End Payors seek the exact relief in their § 16 claim as the Direct Purchasers, the
claim should be dismissed as duplicative. Citing to Howard Hess Dental Laboratories, Inc. v.
Dentsply International, Inc., 602 F.3d 237 (3d Cir. 2010), Reckitt asserts that where no
meaningful difference exists between the cases of the parties seeking an injunction, the End
Payors’ request for injunctive relief should be dismissed. I disagree.
In Howard Hess, the court denied the plaintiff’s motion for summary judgment because
the plaintiff had not established antitrust injury where a nearly identical injunction to that sought
by the plaintiff had already been granted to the Government. Id. at 249. At no point did the
court state that dismissal was appropriate through a motion to dismiss where two groups of
plaintiffs sought the same injunction. In fact, the Howard Hess court noted that it was unaware
of any antitrust authority that would “require the Plaintiffs to have established a need for an
injunction that was ‘non-duplicative.’” Id. While Howard Hess recognizes that the court may
consider an injunction that is already in place in deciding whether antitrust injury exists, that is
much different from requiring dismissal here. At the very least, the End Payors should be
granted the opportunity to present evidence of their injury at the summary judgment stage.
Next, Reckitt argues that the End Payors lack standing to seek injunctive relief under § 16
of the Clayton Act because they fail to allege any ongoing or future injury that would be
remedied by an injunction. Specifically, Reckitt asserts that the only injury that is identified is
the past payment of allegedly inflated prices due to the supposed delayed market entry of generic
Suboxone tablets. The End Payors respond that the harm they suffer is ongoing because Reckitt
destroyed the market for Suboxone tablets and they are continuing to pay artificially inflated
prices for an inferior film product. The End Payors urge that this injury may be remedied by an
injunction through compulsory licensing of the film patents to generic competitors, or by way of
mandated reduction in Reckitt’s price of the branded film. I agree with the End Payors that, as
they have stated a claim for antitrust injury through the product-hopping scheme, and the scheme
has allegedly damaged the market for generic Suboxone tablets significantly, the injury is
ongoing and injunctive relief may be sought. Reckitt’s reliance on In re DDAVP, is misplaced,
as the patent in that case had been invalidated, and thus there was no risk of continued supracompetitive prices. 903 F. Supp. 2d at 210-11.
Finally, Reckitt argues that the End Payors’ claim for injunctive relief should be
dismissed because they have failed to state an underlying violation of the antitrust laws. As I
have found that Plaintiffs have stated a claim for antitrust violations, the End Payors’ claim for
injunctive relief will survive.
M. Have Plaintiffs Sufficiently Pleaded Market Power and a Relevant Market?
As noted previously, in order to state a claim for monopolization, a plaintiff must
plausibly allege “(1) the possession of monopoly power in the relevant market and (2) the willful
acquisition or maintenance of that power as distinguished from growth or development as a
consequence of a superior product, business acumen, or historic accident.” Grinnell, 384 U.S. at
570-71. Reckitt argues that both of Plaintiffs’ complaints should be dismissed for failure to
sufficiently allege monopoly power.29 “Monopoly power is the ability to control prices and
exclude competition in a given market.” Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 307
(3d Cir. 2007) (citing Grinnell, 384 U.S. at 571).
Reckitt argues that in order to allege market power, a plaintiff must first define the
relevant market. While relevant market inquiries are generally fact-intensive, and dismissal on
this ground is disfavored in a motion to dismiss,
[w]here the plaintiff fails to define its proposed relevant market with reference to
the rule of reasonable interchangeability and cross-elasticity of demand, or alleges
a proposed relevant market that clearly does not encompass all interchangeable
substitute products even when all factual inferences are granted in plaintiff’s
favor, the relevant market is legally insufficient and a motion to dismiss may be
Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 436 (3d Cir. 1997).
Plaintiffs respond that they have met the monopoly power requirement in two distinct
ways: (1) directly, through allegations that Reckitt’s conduct caused anticompetitive effects; and
(2) indirectly, through allegations of Reckitt’s dominant share of the relevant market. Where
direct evidence of monopoly power is provided, Plaintiffs assert that definition of a relevant
market is not required. In support of this argument, Plaintiffs cite to Broadcom, where the Third
Circuit stated in a footnote that “[b]ecause market share and barriers to entry are merely
Reckitt also incorporates these arguments into its motion to dismiss the Direct Purchasers’
complaint. The Direct Purchasers have adopted the arguments made by the End Payors;
however, they acknowledge that they inadvertently failed to include certain allegations regarding
market power that had previously been pleaded in one Direct Purchaser’s original complaint.
(See Dkt. No. 13-1164, Doc. No. 1, ¶¶ 98-104.) They state that they intend to file a consolidated
second amended complaint to re-insert those averments upon disposition of this motion.
surrogates for determining the existence of monopoly power, direct proof of monopoly power
does not require a definition of the relevant market.” 501 F.3d at 307 n.3 (citation omitted).
While this statement appears to provide support to Plaintiffs’ argument, cases decided
subsequent to Broadcom have found that at least a rough identification of the relevant market is
still required in direct evidence cases, although perhaps not with the same level of precision as
required for claims proven through indirect evidence. See, e.g., In re Neurontin Antitrust Litig.,
2013 WL 4042460, at *3 (D.N.J. Aug. 8, 2013) (collecting cases).
Plaintiffs urge that they have alleged direct evidence of supra-competitive prices and
restricted output. I agree. Specifically, Plaintiffs have alleged that: (1) Reckitt successfully
impaired and excluded generic competition; (2) Reckitt’s conduct resulted in supra-competitive
prices; (3) no firm was able to respond to Reckitt’s high prices by increasing output of competing
goods; and (4) consumer welfare suffered from the lack of competing goods in a high-price
environment—all of which demonstrates Reckitt’s ability to control prices and exclude
Further, I need not reach the question of whether identification of a relevant market is
required to establish monopoly power in direct evidence cases because Plaintiffs have also
adequately defined a relevant market so as to survive a motion to dismiss. A relevant market is
defined by a products’ reasonable interchangeability of use or cross-elasticity of demand
between the product and its substitutes. Queen City Pizza, 124 F.3d at 436 (quoting Brown Shoe
Co. v. United States, 370 U.S. 294, 325 (1962)).
Reasonable interchangeability considers
whether two products are roughly equivalent when put to a specific use, and considers factors
such as price, use and qualities. Id. at 437. Cross-elasticity of demand considers whether “the
rise in the price of a good within a relevant product market would tend to create a greater
demand for other like goods in that market.” Id. at 437-38 (quoting Tunis Bros. Co., Inc. v. Ford
Motor Co., 952 F.2d 715, 722 (3d Cir. 1991)).
Plaintiffs have alleged that Suboxone is a unique product and that the relevant product
market is limited to Suboxone in all of its forms and dosage strengths and its AB-rated generic
bioequivalents. They further allege that “Suboxone does not exhibit significant, positive crosselasticity of demand with respect to price, with any opioid dependence treatment or other product
other than AB-rated generic versions of Suboxone.”
The complaint further explains that
Suboxone is unique because it is the only opioid replacement maintenance therapy that can be
prescribed in an office setting and taken by patients at home because it is categorized as a
Schedule III drug and co-formulated with an opioid antagonist to deter abuse. (EP Compl.
¶¶ 153-59.) Methadone, for example, is a Schedule II drug and must be administered in a clinic.
Further, Subutex, another opioid treatment drug marketed by Reckitt, is not alleged to be
reasonably interchangeable because it lacks the opioid agonist, and therefore is not
recommended for maintenance therapy. I must accept these statements as true.
Dismissal at the motion to dismiss stage for failure to define a relevant market is
disfavored. Plaintiffs have referenced the rules of reasonable interchangeability and crosselasticity of demand and have plausibly explained why other similar products do not fall within
the relevant market. These allegations are sufficient to state a claim and survive a motion to
dismiss, to the extent that a relevant market analysis is even necessary where direct evidence of
monopoly power is provided.30
The allegations present in the Direct Purchasers’ consolidated amended complaint also
establish direct evidence of monopoly power, and to the extent required to establish a relevant
market, identify it in a similar manner as the End Payors—that is, that the relevant market
includes Suboxone in all of its forms and dosage strengths, including generics. They also briefly
include an explanation as to why Suboxone does not have cross-elasticity of demand with other
N. Should the Four Additional Reckitt Defendants Be Dismissed?
In addition to Reckitt Benckiser Pharmaceuticals, Inc., which actually sells Suboxone,
Plaintiffs have named four additional corporate entities as Defendants: Reckitt Benckiser, Inc.,
Reckitt Benckiser LLC, Reckitt Benckiser Healthcare (UK) Ltd., and Reckitt Benckiser Group
plc. Reckitt argues that these four additional Defendants should be dismissed for failure to
identify what role, if any, these entities played in the alleged anticompetitive scheme. 31 In their
response, the End Payors only argue that Reckitt Benckiser Group plc and Reckitt Benckiser
Healthcare (UK) Ltd. should not be dismissed. At no point do the End Payors address Reckitt’s
argument that no allegations have been raised against Reckitt Benckiser Inc. or Reckitt Benckiser
LLC. Accordingly, the motion will be granted as unopposed as to these two Defendants.
As to Reckitt Benckiser Group plc, the End Payors point to allegations in their complaint
that its board of directors “were advised of the generic-impairing purpose of the product hop
opioid dependence treatments. For the reasons explained in this section, I am not inclined to
grant a motion to dismiss on monopoly power grounds, particularly where the Third Circuit has
articulated that dismissal at this stage is disfavored and where it is unclear that a relevant market
definition is required at all where direct evidence of monopoly power has been provided. I
accept the Direct Purchasers’ allegations regarding the relevant market, but acknowledge that it
is a close call and urge them to file the second amended complaint to include more substantial
facts on this issue.
Reckitt adopts the arguments in this section as to the Direct Purchasers as well. The Direct
Purchasers do not respond, nor do they adopt the End Payors’ response on this issue. The only
allegation in the Direct Purchasers’ complaint regarding these additional Reckitt entities is that
they “manufacture[ ] and market[ ] numerous products, including pharmaceuticals subject to
FDA approval, and w[ere] in whole or in part responsible for some or all of the conduct alleged
herein and attributed to Reckitt.” (DP Compl. ¶¶ 19-23.) These bare bones allegations are not
sufficient to establish liability against these additional Reckitt entities. See In re Mushroom
Direct Purchaser Antitrust Litig., 514 F. Supp. 2d 683, 699 (E.D. Pa. 2007) (“In order to sustain
their claims of monopolization and attempted monopolization, Plaintiffs must . . . prove the
required elements against each individual defendant.”) (quoting Carpet Group Int’l v. Oriental
Rug Imps. Assoc., 256 F. Supp. 2d 249, 284 (D.N.J. 2003)); see also In re Digital Music
Antitrust Litig., 812 F. Supp. 2d 390, 417 (S.D.N.Y. 2011). Accordingly, as to the Direct
Purchasers, these four additional Reckitt entities will be dismissed.
from Suboxone tablets to film, and of the related anticompetitive tactics, and specifically
approved the scheme and its purpose.
The board of directors approved and directed this
anticompetitive scheme over the course of many years, including the period encompassing the
mid-2000s.” (EP Compl. ¶ 83.) While this is sufficient to establish Reckitt Benckiser Group
plc’s role in the alleged scheme, the only allegation made by the End Payors for Reckitt
Benckiser Healthcare (UK) Ltd. is that they conducted a similar product-hopping scheme in the
United Kingdom involving the product Gaviscon. However, these allegations do not tie Reckitt
Benckiser Healthcare (UK) Ltd. to the actions taken with respect to Suboxone. Therefore, I
agree that the claims against Reckitt Benckiser Healthcare (UK) Ltd. should also be dismissed.
O. Should the Claims Asserted by Certain End Payors Be Dismissed for Failure to
Serve the Complaint?
Finally, I address Reckitt’s argument that the claims brought by certain End Payors
should be dismissed for failure to effectuate service. It appears that four End Payors have failed
to serve Reckitt Benckiser Healthcare (UK) Ltd. and Reckitt Benckiser Group plc., and that one
End Payor has failed to serve any Defendant.32 The End Payors do not dispute that these
Plaintiffs failed to effectuate service. Instead, they essentially argue that this failure to serve
should be forgiven because dismissal of certain actions as to only the un-served defendants
would be a waste of judicial resources. Further, as to the foreign entities Reckitt Benckiser
While Reckitt states in their brief that three End Payors failed to serve Reckitt Benckiser
Healthcare (UK) Ltd. and Reckitt Benckiser Group plc and two failed to serve any Defendant
(see Reckitt’s MTD EP Compl. p. 40, n.25), a review of the dockets in this matter reveals the
following: The End Payors that have failed to serve Reckitt Benckiser Healthcare (UK) Ltd. and
Reckitt Benckiser Group plc. are United Food & Commercial Workers Health & Welfare Fund
(Dkt. No. 13-3229), A.F. of L.-A.G.C. Building Trades Welfare Plan (Dkt. No. 13-3545),
Michigan Regional Council of Carpenters Employee Benefits Fund (Dkt. No. 13-1808), and
I.B.E.W. 292 Health Care Plan (Dkt. No. 13-2454). The End Payors that failed to serve any
Defendant are Teamsters Health Services & Insurance Plan Local 404 (Dkt. No. 13-3451).
Healthcare (UK) Ltd. and Reckitt Benckiser Group plc, the End Payors argue that the 120-day
time period for service prescribed by Rule 4(m) does not apply.
While it is true that the 120-day limit does not apply to service in a foreign country, the
time period for service is not unlimited. The Knit With v. Knitting Fever, Inc., 2010 WL
2788203, at *12 (E.D. Pa. July 13, 2010) (quoting United States ex rel. Thomas v. Siemens AG,
2010 WL 1688582, at *14 (E.D. Pa. Apr. 23, 2010)). Courts often apply a general due diligence
standard, which “considers the reasonableness of the plaintiff’s effort and the prejudice to the
defendant resulting from any delay.” Id. Courts maintain significant discretion in extending the
time period for service of the complaint, even in the absence of a showing of good cause. Id.
(citing Petrucelli v. Bohringer & Ratzinger, GmbH, 46 F.3d 1298, 1305 (3d Cir. 1995)). Courts
have granted extensions of time to serve where a defendant is already before the court in a
consolidated action and “presumably the only result of a dismissal would be that the [ ] Plaintiffs
would refile their complaint, resulting in a waste of judicial resources.” AIG Managed Market
Neutral Fund v. Askin Capital Mgmt., L.P., 197 F.R.D. 104, 109 (S.D.N.Y. 2000) (citing In re
Reliance Sec. Litig., 91 F. Supp. 2d 706, 719 (D. Del. 2000)).
While I agree that dismissing some of the End Payors’ claims for failure to serve could
potentially constitute a waste of judicial resources, as it would likely result in a refiling of the
complaint, the End Payors have failed to even attempt to explain why service has not been
effectuated. There has been no attempt to establish good cause for failure to serve. However,
there is also no prejudice to Defendants, as Reckitt has received ample notice of this lawsuit
from the other Plaintiffs and has been actively defending the suit. Therefore, I find that the
appropriate solution is to exercise discretion and allow an additional period of time for these End
Payors to effectuate service.
For the reasons recited above, the following claims will be dismissed: Count III of the
Direct Purchasers’ complaint; a variety of state law claims brought in the End Payors complaint
for lack of standing and failure to state a claim;33 all claims against Reckitt Benckiser, Inc.,
Reckitt Benckiser LLC and Reckitt Benckiser Healthcare (UK) Ltd.; and the Direct Purchasers’
claims against Reckitt Benckiser Group plc. United Food & Commercial Workers Health &
Welfare Fund, A.F.L.-A.G.C. Building Trades Welfare Plan, Michigan Regional Council of
Carpenters Employee Benefits Fund, I.B.E.W. 292 Health Care Plan and Teamsters Health
Services & Insurance Plan Local 404 are directed to effectuate service on all remaining
Defendants within thirty days.
An appropriate Order follows.
The antitrust claims under the laws of Arizona, District of Columbia, Illinois, Kansas, Maine,
Massachusetts, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina,
North Dakota, Oregon, Puerto Rico, Rhode Island, South Dakota, Tennessee, Utah, Vermont and
West Virginia will be dismissed.
The consumer protection claims under the laws of Arkansas, Arizona, District of Columbia,
Idaho, Illinois, Kansas, Maine, Massachusetts, Missouri, Nebraska, New Hampshire, New
Mexico, North Carolina, North Dakota, Oregon, Rhode Island, South Dakota, Tennessee, Utah,
Vermont and West Virginia will be dismissed.
The unjust enrichment claims brought under the laws of Arkansas, Arizona, California,
Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho,
Illinois, Kansas, Kentucky, Louisiana, Maryland, Maine, Massachusetts, Missouri, Montana,
Nebraska, New Jersey, New Hampshire, New Mexico, North Carolina, North Dakota,
Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah,
Vermont, Washington, West Virginia and Wyoming will be dismissed.
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