Sheet Metal Workers Local No. 20 Welfare and Benefit Fund et al v. CVS Health Corporation

Filing 37

OPINION AND ORDER denying 24 Motion to Certify Question to the Indiana Supreme Court; denying 13 Motion to Dismiss. So Ordered by Chief Judge William E. Smith on 11/1/2016. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
)
)
)
Plaintiffs,
)
)
v.
)
)
CVS HEALTH CORPORATION,
)
)
Defendant.
)
___________________________________)
SHEET METAL WORKERS LOCAL NO. 20
WELFARE AND BENEFIT FUND; and
INDIANA CARPENTERS WELFARE FUND,
on behalf of themselves and all
others similarly situated,

C.A. No. 16-046 S

OPINION AND ORDER
WILLIAM E. SMITH, Chief Judge.
Before the Court are Defendant’s Motion to Dismiss (ECF No.
13) and Motion to Certify Question to the Indiana Supreme Court
(ECF No. 24).

Plaintiffs filed Oppositions to both motions (ECF

Nos. 20 and 28) and Defendant filed Replies (ECF Nos. 22 and
31).

For

the

reasons

that

follow,

Defendant’s

Motions

Health

Corporation

(“CVS”),

are

DENIED.
I.

Background 1
Plaintiffs

are

suing

CVS

on

behalf of themselves and a nationwide putative class of entities
providing prescription drug insurance (“Third-Party Payors” or
1

As this is a motion to dismiss, all well-pled facts
alleged by Plaintiffs are taken to be true.
See Rederford v.
U.S. Airways, Inc., 589 F.3d 30, 35 (1st Cir. 2009).

“TPPs”), alleging that CVS perpetrated an eight-year fraud by
reporting
generic

an

inflated

drugs,

Usual

and

Customary

than

the

significantly

rather

(“U&C”)

price

cheaper

for

price

associated with CVS’s Health Savings Pass (“HSP”) program.
In

2006,

“big-box”

retailers

with

pharmacy

departments,

such as Wal-Mart and Target, began offering hundreds of generic
prescription
¶¶ 18-19,

drugs

at

No.

1.)

ECF

significantly
In

reduced

November

prices.

2008,

CVS

(Compl.

responded

by

introducing its HSP program, which provided special pricing for
approximately

400

generic

prescription

medications

to

individuals who paid an annual membership fee. (Id. ¶¶ 20-24.)
CVS is required to “report[] to Third-Party Payors CVS’s
[U&C] price for the drug being dispensed.

The U&C price is

generally defined as the cash price to the general public, which
is

the

amount

charged

cash

customers

for

the

prescription,

exclusive of sales tax or other amounts claimed.” (Id. ¶ 16.)
Plaintiffs claim that because “CVS offers the HSP price as the
cash price to the general public and the HSP price is the most
common price paid by CVS’s cash-paying customers[,] [t]he HSP
price is CVS’s U&C price.” (Id. ¶ 30.)
reporting

the

HSP

price,

“CVS

has

However, instead of

reported

U&C

prices

for

generic prescription drugs that are up to eleven (11) times the
U&C prices reported by some of its most significant competitors
and its own HSP prices.” (Id. ¶ 38.)
2

In contrast, the “big-box”

retailers “report the discounted price as the U&C price.” (Id.
¶ 37.)

According to Plaintiffs, CVS’s “fraudulent scheme” has

resulted in CVS “overcharg[ing] hundreds or thousands of TPPs
(including Plaintiffs and others similarly situated) which paid
for some of the most commonly prescribed generic drugs from CVS
Pharmacies around the country.” (Id. ¶ 41.)
II.

Discussion
CVS argues that: (1) the Complaint does not satisfy the

pleading requirements of Rule 9(b) of the Federal Rules of Civil
Procedure; (2) Plaintiffs have failed to state a claim under
Indiana’s

Deceptive

Consumer

Sales

Act

(“IDCSA”),

or

in

the

alternative, the question of whether TPPs are “consumers” under
the IDCSA should be certified to the Indiana Supreme Court; (3)
named Plaintiffs, who are Indiana TPPs, do not have standing to
assert state law claims on behalf of putative class members, and
Plaintiffs

have

not

properly

pled

the

elements

of

the

state

consumer protection statutes they attempt to invoke; and (4)
Plaintiffs’

negligent

misrepresentation

and

unjust

enrichment

claims fail because they are contract claims masquerading as
tort claims.

The Court will discuss each of these arguments in

turn.
A.

Rule 9(b) of the Federal Rules of Civil Procedure

Rule 9(b) of the Federal Rules of Civil Procedure requires
that a pleading alleging fraud “must state with particularity
3

the circumstances constituting fraud.” Fed. R. Civ. P. 9(b).
The

Complaint

“must

‘(1)

specify

the

statements

that

the

plaintiff contends were fraudulent, (2) identify the speaker,
(3)

state

where

and

when

the

statements

were

made,

and

(4)

explain why the statements were fraudulent.’” Suna v. Bailey
Corp.,

107

F.3d

64,

68

(1st

Cir.

1997)

(quoting

Shields

v.

Citytrust Bancorp, Inc., 25 F.3d 1124, 1127-28 (2d Cir. 1994)).
In

other

“‘who,

words,

what,

Rule

when,

9(b)

where,

requires
and

plaintiffs

how’

of

the

to

allege

alleged

the

fraud.”

United States ex rel. Ge v. Takeda Pharm. Co. Ltd., 737 F.3d
116, 123 (1st Cir. 2013) (quoting United States ex. rel Walsh v.
Eastman Kodak Co., 98 F. Supp. 2d 141, 147 (D. Mass. 2000)).
Here, CVS argues that “the Complaint does not allege that
CVS (or anyone) ever communicated an alleged false statement, a
U&C

price,

to

the

Indiana

Funds,”

which

“is

the

most

basic

requirement of Rule 9(b).” (Def.’s Mot. to Dismiss 8, ECF No. 13
(emphasis in original).)

Moreover, Plaintiffs supposedly

do not allege their plan beneficiaries actually
purchased
overpriced
prescriptions
from
CVS
pharmacies; or when, where, and how frequently any
such (unalleged) purchases took place; or what U&C
prices CVS supposedly reported during those purchases;
or what amount the Indiana Funds purportedly overpaid
for the purchases; or any details describing when or
how CVS obtained such overpayments.
(Id. (emphases in original).)

4

Plaintiffs cite a recent decision in Corcoran v. CVS Health
Corporation & CVS Pharmacy Inc., 169 F. Supp. 3d 970, 986 (N.D.
Cal. 2016), in which the court denied a motion to dismiss in a
similar case.

They argue that, like the plaintiffs in Corcoran,

they have satisfied the “who, what, where, and when” required by
Rule 9(b).
The Court finds that Plaintiffs’ Complaint satisfies Rule
9(b).

It is clear from the Complaint that the alleged false

statement to the Indiana Funds was the reported U&C price, which
Plaintiffs claim was inflated. (See Compl. ¶¶ 16-30, ECF No. 1.)
While it is true that Plaintiffs do not provide certain details
- such as the specific amount of drugs purchased - that level of
specificity

is

not

required.

A

complaint

need

not

“allege

specific shipments to specific customers at specific times with
a

specific

dollar

amount

of

improperly

recognized

Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997).

revenue.”
As long

as “the complaint ‘identifies the circumstances of the alleged
fraud so that defendants can prepare an adequate answer,’” it is
sufficient under Rule 9(b). Id. (quoting Warshaw v. Xoma Corp.,
74 F.3d 955, 960 (9th Cir. 1996)); see also W. Reserve Life
Assur. Co. of Ohio v. Conreal LLC, 715 F. Supp. 2d 270, 283
(D.R.I. 2010) (stating that allegations are sufficient if they
“serve the goals of Rule 9(b) to ‘provide a defendant with fair
notice’ of the claim and discourage baseless actions” (quoting
5

Suna,

107

F.3d

at

68)).

Here,

Plaintiffs’

allegations

are

clear:
[T]he fraud occurred each time CVS electronically
submitted a claim to TPPs using the [National Council
for Prescription Drug Program (“NCPDP”)] reporting
system wherein it misrepresented the price for a
prescription generic drug to be the U&C price when, in
fact,
CVS
cash-paying
customers
were
charged
substantially lower prices for the same drug.
(Pls.’

Opp’n

to

Mot.

to

Dismiss

11,

ECF

No.

20-1.)

The

Complaint adequately puts CVS on notice of the details of the
alleged fraud.

This is particularly true given that “all of the

missing details are likely in the possession of CVS.” Corcoran,
169 F. Supp. 3d at 986. 2
B.

Plaintiffs’ Claims under the IDCSA
1.

Definition of “Consumer” under the IDCSA

One of the purposes of the IDCSA is to “protect consumers
from

suppliers

acts.”

Ind.

deceptive

who

Code

acts

§

“in

commit

deceptive

and

24-5-0.5-1(b)(2).
connection

with

unconscionable

The
a

statute

consumer

sales

prohibits

transaction,”

which is defined as a “sale . . . to a person for purposes that
are primarily personal, familial, charitable, agricultural, or
2

While CVS is correct that the plaintiffs in Corcoran v.
CVS Health Corporation & CVS Pharmacy Inc., gave more detail on
specific transactions, such as “the number of generic drugs
purchased, a time frame in which such purchases were made, the
state in which the purchases were made, and the total inflated
amount they were charged as a result of inflated U&C prices,”
169 F. Supp. 3d 970, 986 (N.D. Cal. 2016), nothing in Corcoran
indicates that the amount of detail in this Complaint would have
been insufficient.
6

household, or a solicitation to supply any of these things.”
Id. §§ 24-5-0.5-2(a)(l), 24-5-0.5-3(a).
“an

individual,

subdivisions

corporation,

or

agencies,

the

“Person” is defined as

state

business

of

trust,

Indiana

or

estate,

its

trust,

partnership, association, nonprofit corporation or organization,
or

cooperative

2(a)(2).
enjoin

or

any

other

legal

entity.”

Id.

§

24-5-0.5-

The statute empowers Indiana’s Attorney General to
a

supplier’s

deceptive

or

unconscionable

acts

and

authorizes courts to order, among other things, restitution for
“aggrieved consumers.” Id. § 24-5-0.5-4(c).
civil

remedy

for

a

consumer

claiming

It also creates a

injury

from

conduct

prohibited by the statute: “A person relying upon an uncured or
incurable

deceptive

act

may

bring

an

action

for

the

damages

actually suffered as a consumer as a result of the deceptive act
. . . .” Id. § 24-5-0.5-4(a).

The question is thus whether the

TPPs suffered damages “as a consumer.”
Although the IDCSA defines “consumer transaction,” it does
not define “consumer,” which leaves some ambiguity as to what is
meant by “as a consumer.”

CVS argues that because consumer is

not defined, it must be given its “plain meaning,” which is
“someone who ‘uses’ or ‘utilizes’ a purchased item.” (Def.’s
Mot. to Dismiss 16, ECF No. 13.)
Indiana

law

has

codified

CVS’s

CVS also points out that

proposed

definition

in

other

areas, such as products liability law. (Id. (citing Ind. Code
7

§ 34-6-2-29(2)

(defining

“[c]onsumer”

as

“any

individual

who

uses or consumes the product”)).)
There does not appear to be any Indiana case law addressing
this

issue,

“consumers”

but

two

under

federal

the

IDCSA.

courts
See

have

In

re

found

Actiq

TPPs

Sales

to
&

be

Mktg.

Practices Litig., 790 F. Supp. 2d 313, 325-26 (E.D. Pa. 2011);
In re Bextra & Celebrex Mktg. Sales Practices & Prod. Liab.
Litig., 495 F. Supp. 2d 1027, 1036-37 (N.D. Cal. 2007).

In

Bextra,

to

the

court

noted

that

the

IDCSA

had

been

changed

define “consumer transaction” as “a sale . . . to a person” as
opposed to “an individual.” 495 F. Supp. 2d at 1037 (emphasis
added).

As noted above, the definition of “person” includes a

“corporation
(quoting
reasoned,

.

Ind.
“a

.

.

or

Code
sale

§

other

legal

entity.”

24-5-0.5-2(2)).

to

a

corporation

Id.

at

Therefore,
‘for

1036-37

the

purposes

court

that

are

primarily personal’ qualifies as a consumer transaction within
the

meaning

of

the

statute,”

even

corporation’s own use. Id. at 1037.
that

“defendants

have

not

if

it

was

not

for

the

The court then determined

demonstrated

that

their

sale

of

Celebrex and Bextra to the TPPs for the patients’ personal use
does not qualify as a consumer transaction as a matter of law.”
Id.

Relying on Bextra, the court in Actiq likewise found that a

TPP could be a consumer under the IDCSA:

8

[The IDCSA] requires only that the plaintiff’s damages
arise from defendant’s provision of such goods.
Plainly stated, there is no mandate under the IDCSA
that the plaintiff must be the consumer who purchased
the goods primarily for personal purposes. Plaintiff
is a valid consumer for purposes of the IDCSA, as its
use of Actiq, through its payment for prescriptions of
its members and beneficiaries, fits squarely within
the
ordinary
meaning
of
the
term
“consume.”
Plaintiff’s payments for the drug arose from the sales
of Actiq to its members and beneficiaries for the
treatment
of
illnesses,
with
such
transactions
qualifying as consumer transactions for personal
purposes under the IDCSA.
Actiq, 790 F. Supp. 2d at 326.
CVS points to decisions from other jurisdictions that have
held that TPPs were not consumers under those states’ consumer
protection

laws.

See,

e.g.,

In

re

Schering-Plough

Corp.

Intron/Temodar Consumer Class Action, No. 2:06-CV-5774, 2009 WL
2043604, at *32 (D.N.J. July 10, 2009) (dismissing TPPs’ claims
under New Jersey’s Consumer Fraud Act); In re Rezulin Products
Liab.

Litig.,

392

F.

Supp.

2d

597,

616-17

(S.D.N.Y.

2005)

(finding that insurance companies were not “consumers” under New
Jersey’s
Emp’rs

consumer
Health

&

protection
Welfare

statute);

Fund

v.

S.

Pfizer,

Ill.
Inc.,

Laborers’
No.

&

08-CV-

5175(KMW), 2009 WL 3151807, at *8-10 (S.D.N.Y. Sept. 30, 2009)
(finding that TPPs were not “consumers” under the New Jersey,
Ohio,

and

Plaintiffs

Texas

consumer

distinguish

protection

Rezulin

and

statutes).

Schering-Plough

However,
because

in

those cases “the misrepresentations concerned the efficacy or

9

safety of the drugs to plan members.” (Pls.’ Opp’n to Mot. to
Dismiss 21-22, ECF No. 20-1.)
that,

“[u]nlike

This Court agrees with Plaintiffs

Rezulin

misrepresentations

here

misrepresentations

about

and

are
the

Schering-Plough,

not
U&C

indirect.

prices

cause the TPPs to overpay.” (Id. at 22.)

to

the

CVS

TPPs

made

directly

to

Moreover, the statutes

and case law in New Jersey, Texas, and Ohio are different than
in Indiana.

Case law in New Jersey has defined a “consumer” as

“one who uses (economic) goods, and so diminishes or destroys
their utilities.” S. Ill. Laborers, 2009 WL 3151807, at *9-10
(citation omitted); see also Rezulin, 392 F. Supp. 2d at 616.
Similarly, “Texas courts have expressly stated that to state a
cause

of

action

under

the

Texas

Act

.

.

.

the

‘goods

and

services . . . must be purchased or leased for use by the party
seeking to state a cause of action.’” S. Ill. Laborers, 2009 WL
3151807,

at

*9

(quoting

Crown

S.W.3d 378, 386 (Tex. 2000)).

Life

Ins.

Co.

v.

Casteel,

22

And in Ohio, “a sale must be to a

natural person in order to constitute a ‘consumer transaction’
within the meaning of the Ohio Act.” Id.
The Court finds that TPPs can qualify as consumers under
the IDCSA.

First, if the intent of the statute was to bar

anyone

bringing

product

from

themselves,

a

that

claim

who

could

did

have

not

easily

actually
been

use

made

the

clear.

Indeed, as CVS notes, “consumer” is defined that way in Indiana
10

statutes concerning products liability; 3 here, however, it was
not.

Second, “consumer transaction” was specifically defined to

include corporations, and there is no indication that definition
would

not

include

a

scenario

like

this

making the payment is not the end-user.

one

where

the

party

Third, the IDCSA states

that “[t]his chapter shall be liberally construed and applied to
promote its purposes and policies,” which include “protect[ing]
consumers from suppliers who commit deceptive and unconscionable
sales acts” and “encourag[ing] the development of fair consumer
sales

practices.”

Ind.

Code

§

24-5-0.5-1.

Finally,

the

two

federal district courts to consider this issue have both found
that TPPs can be consumers under the IDCSA.
CVS argues in the alternative that the Court should certify
the question regarding the definition of “consumer” under the
IDCSA to the Indiana Supreme Court.

Rule 64(A) of the Indiana

Rules of Appellate Procedure provides, in relevant part, that
“any federal district court may certify a question of Indiana
law to the Supreme Court when it appears to the federal court
that

a

proceeding

determinative
controlling

of

presents
the

Indiana

case

an
and

precedent.”

3

issue
on

of

state

law

which

there

is

The

decision

to

that
no

is

clear

certify

a

In the products liability context, it makes sense to
limit causes of action to those who actually use the product, as
they are the ones damaged by any defect.

11

state-law question “rests in the sound discretion of the federal
court.” Lehman Bros. v. Schein, 416 U.S. 386, 391 (1974).
Despite the lack of guidance from Indiana courts on this
issue, the Court finds that it is not a good candidate for
certification.

The Court is not inclined to delay this complex

case with the hope that one part of it could be resolved with
certification.

Moreover, the two other federal district courts

to confront this issue have both interpreted the statute the
same

way

that

this

Court

has,

without

seeking

to

certify

a

question.
2.

Transactions that Occurred Prior to July 1, 2014

CVS alternatively argues that Plaintiffs’ claims under the
IDCSA prior to July 1, 2014 should be dismissed.

The version of

the IDCSA prior to July 1, 2014 enumerated the types of conduct
that could be considered a “deceptive act.” See Lawson v. Hale,
902 N.E.2d 267, 273-74 (Ind. Ct. App. 2009).

The version that

has been in effect since July 1, 2014 has a new catch-all fraud
category.

CVS argues that its alleged conduct does not fit into

any of the pre-2014 enumerated categories.

Plaintiffs disagree,

stating that the following category applies:
price

advantage

exists

as

to

such

“That a specific

subject

of

a

consumer

transaction, if it does not and if the supplier knows or should
reasonably

know

that

it

does

not.”

(Pls.’

Opp’n

to

Mot.

to

Dismiss 23, ECF No. 20-1 (quoting Ind. Code § 24-5-0.5-3(b)(6));
12

see also id. (“That is exactly what Plaintiffs allege here —
TPPs were guaranteed to pay no more than their contracted price
or the U&C price, which CVS then manipulated to ensure that no
price advantage existed.” (emphasis in original)).)
The Court agrees with Plaintiffs that CVS’s alleged conduct
could fall under the “specific price advantage” category.

CVS

cites one case from Ohio interpreting a more specific “price
advantage” provision in Ohio’s Consumer Sales Practice Act, see
Martin v. Lamrite West, Inc., 41 N.E.3d 850, 852-53 (Ohio Ct.
App. 2015), but can point to no authority in Indiana indicating
that the conduct alleged here would not constitute a deceptive
act concerning a “specific price advantage.”
The

next

violations

question

of

the

is

whether

pre-July

Plaintiffs

2014

IDCSA.

adequately
CVS

pled

argues

that

Plaintiffs are improperly attempting to amend their Complaint
through

their

Complaint
issue;

opposition.

never

however,

practices,

CVS

specifically
they

do

is

correct

mentions

say

misrepresentations

the

generally
and

that

Plaintiffs’

“price

advantage”

that

omissions

“[t]he
by

acts,

Defendant

described above, and Defendant’s dissemination of deceptive and
misleading

U&C

involving

trade

prices,
or

occurring

the

course

of

constitute

commerce,

in

conduct

unfair

methods

of

competition and unfair or deceptive acts or practices within the
meaning of each of the above-enumerated [consumer protection]
13

statutes.”

(Compl.

¶

64,

ECF

No.

1.)

While

ideally

the

Complaint would have been more specific, the Court finds that
the

“price

Plaintiffs’

advantage”
allegation

issue
about

is

sufficiently

“deceptive

and

covered

misleading

by
U&C

prices” to put CVS on notice, and does not warrant dismissal.
C.

Plaintiffs’ Claims under State Laws Other than Indiana
1.

Plaintiffs’ Standing to Bring Non-Indiana State
Law Claims on Behalf of Class Members from Other
States

Plaintiffs’
state

consumer

members.

Complaint
protection

pleads
laws

violations

on

behalf

of

of

37

different

putative

class

However, because the named Plaintiffs are both Indiana

TPPs, CVS argues they do not have standing to bring claims based
on other states’ consumer protection laws.
“The
standing

interplay
presents

a

between

Article

surprisingly

III

standing

difficult

and

question.”

class
In

re

Solodyn (Minocycline Hydrochloride) Antitrust Litig., No. CV 14MD-02503-DJC, 2015 WL 5458570, at *13 (D. Mass. Sept. 16, 2015).
In Ortiz v. Fibreboard Corp., the United States Supreme Court
held that where “class certification issues are . . . ‘logically
antecedent’ to Article III concerns, . . . Rule 23 certification
should be treated first, ‘mindful that [the Rule’s] requirements
must be interpreted in keeping with Article III constraints . .
. .’” 527 U.S. 815, 831 (1999) (quoting Amchem Products, Inc. v.
Windsor, 521 U.S. 591, 612-13 (1997)).
14

In the wake of Ortiz,

“[c]ourts

have

taken

different

views

about

how

to

evaluate

Article III and class standing at the motion to dismiss stage
where putative class representatives assert claims arising under
the laws of states where they neither reside nor allege to have
suffered injury.” Solodyn, 2015 WL 5458570, at *14.
In

Plumbers’

Union

Local

No.

12

Pension

Fund

v.

Nomura

Asset Acceptance Corp., the First Circuit dismissed defendants
against whom absent class members, but not the named plaintiffs,
had

alleged

claims.

632

F.3d

762,

770-71

(1st

Cir.

2011).

However, the Court acknowledged Ortiz and clarified that the
holding of Plumbers’ Union was with one “qualification”:
The qualification, on which we reserve judgment, is
one
where
the
claims
of
the
named
plaintiffs
necessarily give them — not just their lawyers —
essentially
the
same
incentive
to
litigate
the
counterpart claims of the class members because the
establishment
of
the
named
plaintiffs’
claims
necessarily establishes those of other class members.
Id. at 770.

Several district courts have used this rationale to

defer ruling on standing issues until the Rule 23 analysis in
antitrust suits. See, e.g., Solodyn, 2015 WL 5458570, at *14
(deferring consideration of standing where “[a]ll members of the
putative

class

have

a

common

interest

in

litigating

claims

arising from the Defendants’ [conduct]” (citation omitted)); In
re Nexium (Esomeprazole) Antitrust Litig., 968 F. Supp. 2d 367,
407

(D.

Mass.

2013)

(“This

Court

holds

that

the

requisite

‘identity of issues’ and ‘alignment of incentives’ is present
15

amongst the End–Payors here.

All members of the putative class

have a common interest in litigating claims arising from the
Defendants’

allegedly

anticompetitive

collusion

designed

to

cause the End–Payors to pay supracompetitive prices across the
several states.”); see also In re Relafen Antitrust Litig., 221
F.R.D. 260, 269 (D. Mass. 2004) (certifying class that did not
have

named

plaintiffs

from

each

state

because

“[t]he

more

traditional inquiry, which . . . would require class counsel to
identify

representatives

from

each

state

involved

in

a

multistate class action, would render class actions considerably
more

cumbersome

to

initiate,

and

in

turn,

less

effective

in

overcoming a lack of incentives to prosecute individual rights
and in ‘achiev[ing] economies of time, effort, and expense.’”
(quoting Amchem, 521 U.S. at 615)).
However,

courts

“deferring

[the]

plaintiffs

in

relation

to

a

the

in

other

standing

jurisdictions

determination

proposed

class

laws

certain

of

action,
states

have

would
with

no

noted

‘allow

that
named

injuries

referenced

in

in

their

complaint, to embark on lengthy class discovery with respect to
injuries

in

potentially

every

state

in

the

Union.’”

In

re

Niaspan Antitrust Litig., 42 F. Supp. 3d 735, 758 n.20 (E.D. Pa.
2014) (citation omitted) (collecting cases).

CVS cites a number

of cases where courts have dismissed claims because the named
plaintiffs did not have individual standing. See, e.g., In re
16

Aggrenox Antitrust Litig., 94 F. Supp. 3d 224, 251 (D. Conn.
2015); Niaspan, 42 F. Supp. 3d at 757-58; In re HSBC Bank, USA,
N.A., Debit Card Overdraft Fee Litig., 1 F. Supp. 3d 34, 48-49
(E.D.N.Y. 2014); Pardini v. Unilever U.S, Inc., 961 F. Supp. 2d
1048, 1061 (N.D. Cal. 2013); In re Dairy Farmers of Am., Inc.
Cheese Antitrust Litig., No. 09-CV-3690, 2013 WL 4506000, at *8
(N.D.

Ill.

Aug.

23,

2013);

In

re

Refrigerant

Compressors

Antitrust Litig., No. 2:09-MD-02042, 2012 WL 2917365, at *6-7
(E.D. Mich. July 17, 2012); Cornelius v. Fidelity Nat’l Title
Co., No. C08-754MJP, 2009 WL 596585, at *9-10 (W.D. Wash. Mar.
9, 2009).

In addition, the court in Corcoran recently dismissed

claims brought by California named plaintiffs under the laws of
38 other states, rejecting the plaintiffs’ argument that this
issue

would

be

more

appropriately

handled

at

the

class

certification stage. Corcoran v. CVS Health Corp., No. 15-cv3504YGR, 2016 WL 4080124, at *2-3 (N.D. Cal. July 29, 2016).
Although there is authority going both ways on this issue,
the

trend

in

the

First

Circuit

seems

to

be

deferring

the

standing analysis to the class certification stage, so long as
the named plaintiffs have “essentially the same incentive to
litigate the counterpart claims of the class members because the
establishment

of

the

named

plaintiffs’

claims

necessarily

establishes those of other class members.” Plumbers’ Union, 632
F.3d at 770.

Here, the scheme alleged by Plaintiffs — that CVS
17

has been fraudulently reporting its U&C price to TPPs — is the
same across the country.

Plaintiffs have a collective interest

in litigating their claims together to attempt to recover and
have CVS change its system going forward.

Moreover, “this is

not a case where the Named Plaintiffs are attempting ‘to piggyback on the injuries of the unnamed class members.’ Rather, each
of the Named Plaintiffs asserts a personal injury resulting from
Defendants’ allegedly [fraudulent conduct].” In re Grand Theft
Auto

Video

Game

Consumer

Litig.

(No.

II),

No.

06-MD-

1739(SWK)(MHD), 2006 WL 3039993, at *3 (S.D.N.Y. Oct. 25, 2006)
(internal

citation

omitted).

Put

another

way,

CVS

is

not

challenging Plaintiffs’ standing to bring their own claims; it
is challenging their standing to bring claims on behalf of the
class.

See

id.

(“The

relevant

question,

therefore,

is

not

whether the Named Plaintiffs have standing to sue Defendants —
they

most

certainly

do

—

but

whether

their

injuries

are

sufficiently similar to those of the purported Class to justify
the prosecution of a nationwide class action.”).

This question

would be appropriately, and more efficiently, addressed at the
class

certification

stage.

Accordingly,

the

Court

denies

without prejudice Defendant’s Motion to Dismiss with respect to
Plaintiffs’ claims under state laws other than Indiana.

18

2.

Failure to Separately Plead the Elements of Each
State’s Consumer Protection Statute

Plaintiffs’

Complaint

lists

37

state

consumer

protection

statutes, followed by an allegation that “[t]he acts, practices,
misrepresentations and omissions by Defendant described above,
and Defendant’s dissemination of deceptive and misleading U&C
prices, occurring in the course of conduct involving trade or
commerce, constitute unfair methods of competition and unfair or
deceptive acts or practices within the meaning of each of the
above-enumerated

statutes.”

(Compl.

¶

64,

ECF

No.

1.)

CVS

claims this is insufficient because Plaintiffs do not “attempt[]
to allege that CVS’s conduct violates those general statutory
terms as interpreted by each state.” (Def.’s Mot. to Dismiss 14,
ECF No. 13.)

According to CVS, “[o]ther courts have dismissed

claims alleged using a similar blunderbuss strategy, including
claims

filed

by

the

Indiana

Funds’

same

consumer protection case.” (Id. at 15.)
cites do not support this proposition.
Reg’l

Council

of

Carpenters

Welfare

counsel

in

another

However, the cases CVS
In Indiana/Kentucky/Ohio

Fund

v.

Cephalon,

Inc.,

which involved Plaintiffs’ counsel, the court only analyzed the
Indiana statute because the plaintiff “agree[d] that we need not
consider any other state’s statute at this stage.” No. 13-7167,
2014 WL 2115498, at *8 (E.D. Pa. May 21, 2014).

The plaintiff’s

claim was dismissed because it did not meet the requirements of

19

the

Indiana

statute;

the

other

state

claims

were

dismissed

because the named plaintiff could no longer bring its own claim.
Id. at *9, 10.
The other two cases cited by CVS, which were not class
actions, involved bare-bones complaints. See Williams v. Davey
Tree Expert Co., No. 8:10-MC-68-T-30TBM, 2010 WL 3490992, at *1
(M.D. Fla. Aug. 16, 2010) (“This recitation of a laundry list of
causes of action not only fails to include the elements for each
claim, but also fails to provide any factual detail so as to
give

Defendant

fair

notice

of

what

the

claims

are

and

the

grounds upon which each rests.”); Protegrity Corp. v. Paymetric,
Inc., No. 3:13-CV-01549(VLB), 2014 WL 3849972, at *3 (D. Conn.
Aug. 5, 2014) (dismissing complaint that “does not even offer a
‘formulaic recitation of the elements of a cause of action’”
(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009))).
CVS is adequately on notice of the conduct Plaintiffs claim
violates the various state consumer protection statutes.

At the

class certification stage, Plaintiffs will need to delve into
the

specifics

of

each

statute

to

prove

that

the

class

representatives are sufficiently typical; for the moment, their
pleading is sufficient.

20

3.

CVS

Failure to State a Claim under Various States’
Consumer Protection Laws

further

argues:

(1)

that

Plaintiffs

“have

no

claim

under the twenty-five statutes expressly requiring residence or
injury within the relevant state,” (2) that “[e]leven statutes
limit suits to consumers or natural persons, which the Indiana
Funds are not,” and (3) that “[s]ix statutes bar class actions.”
(Def.’s Mot. to Dismiss 20-23, ECF No. 13.) 4

The Court finds

that it will be more efficient to address these issues at the
class certification stage.
with

respect

to

these

Accordingly, CVS’s Motion to Dismiss

issues

is

denied

without

prejudice

to

raising them again when the Court addresses class certification.
D.

Plaintiffs’ Negligent
Enrichment Claims
1.

Misrepresentation

and

Unjust

Economic Loss Doctrine

The economic loss doctrine preserves the line between tort
and contract, providing that:
If tort claims are based on duties that are imposed by
contract, then under the economic-loss rule, contract
law provides the remedies for economic losses. The
economic-loss doctrine forbids a party from suing or
recovering in tort for economic or pecuniary losses
that arise only from breach of contract or are
associated with the contract relationship. In other
words, tort damages are generally not recoverable
unless the plaintiff suffers an injury that is

4

In response to these arguments, Plaintiffs have withdrawn
their claims under the consumer protection statutes in New
Jersey, Kansas, Ohio, and Texas.
(See Pls.’ Opp’n to Mot. to
Dismiss 27-28, ECF No. 20-1.)
21

independent and separate from the economic
recoverable under a breach-of-contract claim.

losses

74 Am. Jur. 2d Torts § 24 (2015); see Indianapolis-Marion Cty.
Pub. Library v. Charlier Clark & Linard, P.C., 929 N.E.2d 722,
739 (Ind. 2010) (“A bright line distinction between the remedies
offered in contract and tort with respect to economic damages
. . .

encourages

parties

to

negotiate

toward

the

risk

distribution that is desired or customary.” (citation omitted)).
Here,

CVS

argues

that

Plaintiffs’

claims

stem

from

contractual duty to charge them the U&C price.
Plaintiffs

note,

the

court

in

Corcoran

CVS’s

However, as

rejected

that

same

argument:
CVS argues that Plaintiffs’ fraud and negligent
misrepresentation
claims
are
nothing
more
than
disguised breach of contract claims, which should be
dismissed under the economic loss doctrine. The Court
rejects the very premise of Defendants’ argument. To
support dismissal, Defendants contend the [Complaint]
does not allege any wrongdoing independent of its
contractual obligation to report an accurate U&C price
to third-party payors.
Not so.
The gravamen of
Plaintiffs’ allegations is that CVS created the HSP
program to report misleading U&C prices in a manner
that contravened industry standards with the intent to
deceive Plaintiffs and class members.
Plaintiffs
additionally
allege
that
CVS
misrepresented
the
availability of the HSP program and their ability to
participate therein. These allegations undoubtedly
fall outside of CVS’s contractual obligations to third
party payors.
169

F.

Supp.

distinguish

3d

at

Corcoran

988

(emphasis

because

the

added).
plaintiffs

CVS

attempts

there

were

payors; but this did not factor into the court’s analysis.
22

to

end-

Plaintiffs also point out that their Complaint states that
CVS is required to report an accurate U&C price by the NCPDP.
CVS takes issue with the merits of this claim, arguing that the
U&C field on the relevant NCPDP form is optional.

This argument

may end up being successful further down the line, but at this
stage, the Court must take what the Plaintiffs pled at face
value. (See Compl. ¶ 16, ECF No. 1 (“Pursuant to the NCPDP
reporting standard, pharmacies are required to report the amount
of its U&C price for each prescription transaction using NCPDP’s
mandatory pricing segment code 426–DQ.”).)
The bottom line is that, based on the Complaint’s statement
that CVS orchestrated a fraudulent scheme that violated industry
standards, the economic loss doctrine does not bar their claims
at this stage.

It may well come out in discovery that the only

basis for the claims is in contract, in which case this could be
revisited at summary judgment.
2.
The

Negligent Misrepresentation

elements

of

a

claim

for

negligent

misrepresentation

include (1) receipt of a misrepresentation made by a defendant
and

(2)

justifiable

reliance

on

the

misrepresentation.

See

Restatement (Second) of Torts § 552 (1977); Eby v. York-Div.,
Borg-Warner, 455 N.E.2d 623, 628 (Ind. Ct. App. 1983) (following
§ 552).

CVS argues that, even if the economic loss doctrine

does

apply,

not

Plaintiffs’

negligent
23

misrepresentation

claim

fails because: (1) “The Complaint alleges that U&C prices were
reported to ‘Third-Party Payors’ generically; it does not allege
that

U&C

prices

were

reported

to

the

Indiana

Funds

specifically”; and (2) “the Indiana Funds have not plausibly
pled that they justifiably relied on an ‘erroneous’ reported
price.” (Def.’s Mot. to Dismiss 28-29, ECF No. 13.)
Regarding the first issue, the Complaint makes clear that
CVS reported the U&C price to all TPPs, including the Indiana
Funds.

The second issue is a closer question.

CVS argues that

the Complaint admits that the HSP program was well advertised
and therefore Plaintiffs cannot claim they were unaware that the
HSP price was lower than the reported U&C price.
submitted

a

notice

of

supplemental

authority

CVS also

(ECF

No.

32)

regarding the First Circuit’s recent decision in United States
ex

rel.

Winkelman

dismissal

of

a

v.

False

CVS
Claims

Caremark
Act

Corp.,

(“FCA”)

which

claim

affirmed

against

CVS

concerning its HSP program. 827 F.3d 201, 203 (1st Cir. 2016).
The First Circuit held that the “public disclosure bar” of the
FCA prohibited the plaintiffs in that case from maintaining a
qui tam lawsuit based on the allegation that CVS was required
to, but did not, report its HSP program prices to government
healthcare programs as its U&C price. Id. at 203, 213.
public

disclosure

bar

forecloses

a

qui

tam

“[T]he

action

‘if

substantially the same allegations or transactions as alleged in
24

the

action

enumerated

.

.

.

were

sources.”

§ 3730(e)(4)(A)).

The

publicly

Id.
Court

at

disclosed’
208

found

in

(quoting

that

a

list

31

“publicly

of

U.S.C.
disclosed

materials [available before relators filed suit in August 2011]
revealed,

quite

plainly,

that

CVS

was

not

providing

price as its U&C price . . . .” Id. at 209.

its

HSP

CVS argues that

likewise here, Plaintiffs could not have justifiably relied on
the U&C price because the HSP price was so well publicized.
Plaintiffs

counter

that

knowing

the

HSP

price

was

not

enough to reveal the fraud because they were unaware of the
percentage of cash-paying customers enrolled in the HSP program.
Without that information, they could not determine whether the
U&C price — the price that the majority of cash customers pay —
was the HSP price or not.
The Court agrees with Plaintiffs - at least at this stage
of the litigation.

The crux of their argument is that the HSP

price should have been reported as the U&C price, not because it
was the lowest price CVS charged, but because it was the price
most cash-paying customers paid.

By contrast, Winkelman dealt

with Medicare Part D and Medicaid, and at least in Connecticut,
“regulations mandated that CVS provide Medicaid with ‘the lowest
drug price’ that CVS was offering to consumers . . . .” Id.
(emphasis added).

It was clear from the publicity that the U&C

price that CVS was charging Medicaid was not the lowest price.
25

While

CVS

argues

sophisticated

in

its

parties,

Reply

they

that,

should

because

have

Plaintiffs

inquired

as

are

to

the

percentage of customers enrolled in the HSP program, the Court
finds

that,

at

the

motion

to

dismiss

stage,

Plaintiffs

have

sufficiently pled justifiable reliance.
3.

Unjust Enrichment

Aside from the economic loss doctrine, CVS’s main argument
as to Plaintiffs’ unjust enrichment claim is that it concerns
the

same

consumer

conduct

that

protection

misrepresentation.

CVS

statutes

argues
or

Therefore,

is

not

actionable

the

common

law

of

“[i]f

the

Court

under

negligent

finds

that

Plaintiffs have not stated valid claims for consumer protection
violations

and

negligent

misrepresentation,

the

unjust

enrichment claim must fail as well, since Plaintiffs provide no
independent
reporting

basis

a

U&C

for
price

finding
that

was

that
not

CVS

acted

the

HSP

(Def.’s Mot. to Dismiss 31, ECF No. 13.)
finds

that

Plaintiffs

have

sufficiently

‘unjustly’
program

by

price.”

Because the Court

alleged

a

fraudulent

scheme, the unjust enrichment claim may also go forward.
III. Conclusion
For

the

foregoing

reasons,

CVS’s

Motion

to

Dismiss

and

Motion to Certify Question to the Indiana Supreme Court are both
DENIED.

As stated herein, denial of CVS’s Motion to Dismiss is

WITHOUT PREJUDICE to CVS raising its arguments concerning claims
26

under state laws other than Indiana at the class certification
stage.

IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: November 1, 2016

27