Employer Teamsters-Local Nos. 175/505 Health and Welfare Trust Fund et al v. Bristol Myers Squibb Company et al
Filing
72
MEMORANDUM OPINION AND ORDER granting 50 MOTION to Dismiss and Dismisses Plaintiff's Second Amended Complaint in its entirety; the Court also grants Plaintiffs' 70 MOTION for Leave to File a supplemental memorandum and has considered the proposed supplemental memorandum. Signed by Judge Robert C. Chambers on 1/29/2013. (cc: attys; any unrepresented party) (skm)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
EMPLOYER TEAMSTERS-LOCAL NOS.
175/505 HEALTH AND WELFARE
TRUST FUND; and INTERNATIONAL
BROTHERHOOD OF TEAMSTERSVOLUNTARY EMPLOYEE BENEFITS
TRUST,
Plaintiffs,
v.
CIVIL ACTION NO. 3:12-0587
BRISTOL MYERS SQUIBB COMPANY;
SANOFI-AVENTIS U.S., L.L.C.; and
SANOFI-AVENTIS U.S., INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants’ motion (ECF No. 50) to dismiss Plaintiffs’
Second Amended Complaint (“SAC”). The parties presented oral argument regarding the motion
to dismiss on January 16, 2013, in Huntington. For the reasons stated below, the Court
GRANTS the motion to dismiss (ECF No. 50). Also pending before the Court is Plaintiffs’
motion for leave to file a supplemental memorandum (ECF No. 70). For reasons appearing to the
Court, the Court GRANTS this motion (ECF No. 70).1
Statement of Facts
The drug at the center of this litigation—Plavix (clopidogrel bisulfate)—is a prescription
anticoagulant, or blood thinner. The Food & Drug Administration (“FDA”) initially approved
1
The Court has reviewed Plaintiffs’ proposed supplemental memorandum, attached to their
motion, and this supplemental memorandum did not alter the Court’s analysis.
Plavix for use in patients who experienced a recent heart attack, stroke, or peripheral arterial
disease (“PAD”), and later additionally approved its use in patients suffering from acute
coronary syndrome (“ACS”). Mem. in Supp. of Defs.’ Mot. to Dismiss SAC, at 3-4, ECF No. 51.
Bristol Myers Squibb manufactured Plavix, and together with Sanofi engaged in massive
marketing of the drug. Plavix has generated massive revenues, with allegedly over $42 billion in
sales worldwide, and is one of the world’s top-selling drugs. SAC ¶ 3, ECF No. 48.
The Employer Teamsters-Local Nos. 175/505 Health and Welfare Trust Fund and
International Brotherhood of Teamsters Voluntary Employee Benefits Trust (“Plaintiffs”)
commenced this action against Defendants Bristol Myers Squibb Company (“BMS”), SanofiAventis U.S., L.L.C., and Sanofi-Aventis U.S., Inc.2 on February 27, 2012. Compl., ECF No. 1.
The Complaint alleged that Defendants engaged in misleading and false marketing of Plavix,
resulting in Defendants’ unjust enrichment.
Plaintiffs properly filed their First Amended Complaint (“FAC”) on April 6, 2012, adding
a claim for breach of implied warranty of merchantability in addition to unjust enrichment. ECF
No. 13. Defendants moved for dismissal of the FAC, and that motion became ripe for disposition
on July 9, 2012. The Court scheduled oral argument concerning the motion to dismiss for
October 12, 2012, but then canceled oral argument because Plaintiffs indicated that they wanted
to amend their pleadings.
Plaintiffs timely moved on October 18, 2012, for leave to file a second amended
complaint due to recent legal developments, namely, a recently unsealed complaint filed in the
Southern District of Illinois. See U.S. v. Bristol Myers Squibb, No. 11-cv-246-DRH-SCW (S.D.
2
Additional defendants were named in the initial Complaint, but those additional defendants
were subsequently terminated from the litigation, leaving the three defendants noted.
2
Ill.). The Court granted such leave, and Plaintiffs filed the SAC on October 24, 2012. ECF No.
48. As with the FAC, the SAC alleges unjust enrichment and breach of implied warranty of
merchantability. The SAC differs from the FAC in many regards, however, such as: the
attachment of multiple exhibits, whereas the FAC had none; the inclusion of more substantive
details; reference to the recently unsealed complaint; and a re-wording of the breach of implied
warranty claim.
Plaintiffs allege that Defendants misrepresented Plavix as being more effective than
aspirin for certain indicated usages, namely treating patients who recently experienced
myocardial infarction (“MI”) or stroke. Specifically, Plaintiffs claim that Defendants
mischaracterized scientific studies as supporting these efficacy claims, when in fact such studies
do not actually show Plavix’s superiority. Plaintiffs allege that the marketing campaign
surrounding Plavix influenced doctors’ decisions in prescribing the drug. While each Plavix pill
costs approximately $4.00, an equivalent dose of aspirin costs approximately $0.04. Given this
price difference and Plavix’s lack of superiority over aspirin, Plaintiffs—as third party payors
(“TPPs”)—allege that they suffered damages by reimbursing Plavix prescriptions on behalf of
their insureds. Plaintiffs allege that the monetary benefit retained by Defendants constitutes
unjust enrichment. Plaintiffs further claim that Defendants have breached the implied warranty
of merchantability. Specifically, Plaintiffs allege that “Plavix was not fit for its ordinary and
intended pharmacological purpose of being a superior alternative to aspirin for certain indicated
usages” and that “Defendants therefore breached the warranty implied by law that Plavix was fit
for the ordinary purposes for which it was to be used.” SAC ¶¶ 58-59.
3
Defendants have moved for dismissal of the SAC. ECF Nos. 50, 51. They argue that
there are significant independent intervening events between the Plavix marketing and the
prescription reimbursements, and that proximate causation is therefore lacking. Additionally,
Defendants argue that Plaintiffs have not suffered any economic injury from paying for Plavix
prescriptions because premiums cover the Plavix reimbursement costs, and insurance funds take
into account the risk of wrongful prescriptions when setting premiums. Lastly, Defendants argue
that Plaintiffs’ claims sound in fraud and must therefore meet the pleading standard of Federal
Rule of Civil Procedure 9(b), which such claims fail to do.
Defendants’ motion to dismiss the SAC became ripe for disposition on December 3,
2012.3 The parties presented oral argument on January 16, 2013, in Huntington. Therefore, the
Court is ready to resolve this motion to dismiss.
In Section I, the Court discusses generally the requirements of Rule 12(b)(6). Next, in
Section II, the Court examines whether Plaintiffs plausibly state a claim for relief based on the
elements of each claim, apart from any causation requirement; specifically, Section II discusses
how Plaintiffs characterize Plavix’s ordinary purpose, and Plaintiffs’ pleading of unjust
enrichment. Lastly, in Section III, the Court analyzes Plaintiffs’ pleading of causation.
I. Standard Of Review under Rule 12(b)(6)
3
Defendants filed a Renewed Motion for Transfer of Actions Pursuant to 28 U.S.C. § 1407 for
Coordinated or Consolidated Pretrial Proceedings with the U.S. Judicial Panel on Multidistrict
Litigation (“JPML”) on October 15, 2012. Defendants subsequently moved for this Court to stay
decision on the motion to dismiss, pending the JPML’s decision on the motion to transfer. ECF
No. 55. Additionally, Defendants have filed multiple notices supporting the motion to stay. ECF
Nos. 58, 60, 63. For reasons presented at oral argument, the Court has decided to resolve the
motion to dismiss regardless.
4
In Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court
disavowed the “no set of facts” language found in Conley v. Gibson, 355 U.S. 41 (1957), which
was long used to evaluate complaints subject to 12(b)(6) motions. 550 U.S. at 563. In its place,
courts must now look for “plausibility” in the complaint. This standard requires a plaintiff to set
forth the “grounds” for an “entitle[ment] to relief” that is more than mere “labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at
555 (internal quotation marks and citations omitted). Accepting the factual allegations in the
complaint as true (even when doubtful), the allegations “must be enough to raise a right to relief
above the speculative level . . . .” Id. (citations omitted). If the allegations in the complaint,
assuming their truth, do “not raise a claim of entitlement to relief, this basic deficiency should . .
. be exposed at the point of minimum expenditure of time and money by the parties and the
court.” Id. at 558 (internal quotation marks and citations omitted).
In Ashcroft v. Iqbal, 556 U.S. 662 (2009), the Supreme Court explained the requirements
of Rule 8 and the “plausibility standard” in more detail. In Iqbal, the Supreme Court reiterated
that Rule 8 does not demand “detailed factual allegations[.]” 556 U.S. at 678 (internal quotation
marks and citations omitted). However, a mere “unadorned, the-defendant-unlawfully-harmedme accusation” is insufficient. Id. “To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Id. (quoting Twombly, 550 U.S. at 570). Facial plausibility exists when a claim contains “factual
content that allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Id. (citation omitted). The Supreme Court continued by explaining that,
although factual allegations in a complaint must be accepted as true for purposes of a motion to
5
dismiss, this tenet does not apply to legal conclusions. Id. “Threadbare recitals of the elements of
a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation
omitted). Whether a plausible claim is stated in a complaint requires a court to conduct a contextspecific analysis, drawing upon the court’s own judicial experience and common sense. Id. at
679. If the court finds from its analysis that “the well-pleaded facts do not permit the court to
infer more than the mere possibility of misconduct, the complaint has alleged-but it has not
‘show[n]’-‘that the pleader is entitled to relief.’” Id. (quoting, in part, Fed. R. Civ. P. 8(a)(2)).
The Supreme Court further articulated that “a court considering a motion to dismiss can choose
to begin by identifying pleadings that, because they are no more than conclusions, are not
entitled to the assumption of truth. While legal conclusions can provide the framework of a
complaint, they must be supported by factual allegations.” Id. This Court will keep the
requirements of Rule 12(b)(6) in mind as it examines Plaintiffs’ claims.
II. Pleading of Ordinary Purpose and Unjust Enrichment
Plaintiffs allege that Defendants are liable for breach of implied warranty of
merchantability and unjust enrichment because Plavix was not as effective as claimed.
Specifically, Plaintiffs raise the following allegations:
1. Defendants lied about the safety and efficacy of Plavix . . . . Specifically,
Defendants misrepresented the purported health benefits of Plavix by promoting it
as a superior drug to aspirin for certain indicated usages for which Plavix is
actually no more effective than aspirin, then charging approximately 100 times
more for Plavix than aspirin costs.
4. Defendants have achieved these enormous sales by unlawfully misleading
physicians, consumers and health insurers regarding the efficacy and safety of
Plavix . . . . Defendants promote Plavix as being more effective than aspirin . . . .
5. Defendants’ wrongful promotion of Plavix as more effective than aspirin
caused Plaintiffs to suffer significant damages. Plavix costs approximately $4.00
6
per pill, whereas an equivalent dose of aspirin costs approximately $0.04 per pill,
despite the fact that Plavix actually is no more effective than aspirin for many of
its indicated usages.
15. Defendants implemented a multi-faceted scheme to wrongfully overcharge
Plaintiffs by unjustly and deceptively promoting Plavix as superior to aspirin in
order to increase Plavix sales.
26. . . . [B]ased on the CAPRIE study,4 it would be incorrect and improper to
claim that Plavix is more effective than aspirin at reducing the risk of negative
heart health outcomes for patients who had recently suffered an ischemic stroke.
31. . . . Defendants falsely represented that the CAPRIE study concluded that
Plavix was more effective than aspirin for . . . these subgroups.
38. . . . Defendants misleadingly characterized the PRoFESS study5 results in
communications with physicians to enforce the unsupported notion that Aggrenox
was inferior to Plavix . . . .
40. Defendants’ purpose of presenting the results of the PRoFESS study in this
confusing manner was to increase the Plavix market share in the post-stroke
population, despite study results indicating that Plavix simply is not more
effective than Aggrenox or aspirin for such patients.
46. Defendants used traditional drug marketing tactics to reach prescribing
physicians. Sales representatives targeted and talked to physicians, nurses and
other health care providers, including those located in West Virginia, about
Plavix. As described above, those communications were deliberately misleading
at Defendants’ instruction.
50. On information and belief, these marketing efforts, unjustly misleading
though they were, were effective and resulted in physicians prescribing Plavix and
causing health insurers, including Plaintiffs, to reimburse the cost of their
4
The 1996 Clopidogrel [Plavix] vs. Aspirin in Patients at Risk for Ischemic Events (“CAPRIE”)
study compared the efficacy of Plavix and aspirin in reducing cardiovascular risks. The study
found Plavix to be more effective than aspirin in reducing the risk of negative heart health
outcomes for PAD patients, but not more effective than aspirin for recent MI patients and
individuals who recently experienced ischemic stroke. SAC ¶¶ 25-27 (footnote not in original).
5
The 2008 Prevention Regimen for Effectively Avoiding Second Strokes (“PRoFESS”) study
examined the efficacy of Plavix and prescription drug Aggrenox (aspirin plus dipyridamole) in
preventing secondary stroke for recent stroke patients. The results did not show that Plavix was
more effective that Aggrenox. SAC ¶¶ 36-37 (footnote not in original).
7
insureds’ Plavix prescriptions, even though Plavix was, in fact, no better than . . .
aspirin for many patients.
52. Defendants deliberately provided incorrect information to physicians, the
consuming public, and health insurers including Plaintiffs regarding the efficacy
of Plavix compared to the cheaper alternative of aspirin. Defendants manipulated,
misrepresented, and failed to disclose adverse clinical data to those parties in
order to turn a profit by inducing health insurers, including Plaintiffs, to pay for
Plavix.
58. At the time of these Plavix purchases, and at the time Plaintiffs paid for them
through insurance reimbursements, Plavix was not fit for its ordinary and intended
pharmacological purpose of being a superior alternative to aspirin for certain
indicated usages.
SAC.
As mentioned earlier, Plaintiffs’ SAC re-words the claim for breach of implied warranty
of merchantability as it appeared in the FAC. In the SAC, Plaintiffs allege that “Plavix was not
fit for its ordinary and intended pharmacological purpose of being a superior alternative to
aspirin for certain indicated usages” and that “Defendants therefore breached the warranty
implied by law that Plavix was fit for the ordinary purposes for which it was to be used.” ¶¶ 5859 (emphasis added). In comparison, the FAC alleged that “at the time of the purchases Plavix
did not have the quality that a buyer would reasonably expect” and “at the time of these
purchases, Defendants knew that Plavix was not of the quality to safely and effectively treat
certain conditions Defendants claimed it would be safe and effective [for treating] and was not
fit for the ordinary purposes for which Plavix was to be used.” ¶¶ 46-47 (emphasis added). In
other words, while the FAC alleges that Plavix had the ordinary purpose of “safely and
effectively treat[ing] certain conditions,” the SAC instead recasts Plavix as having the ordinary
purpose of “being a superior alternative to aspirin for certain indicated usages.”
8
West Virginia statutory law details the requirements of the implied warranty of
merchantability:
(2) Goods to be merchantable must be at least such as
(a) pass without objection in the trade under the contract description; and
(b) in the case of fungible goods, are of fair average quality within the
description; and
(c) are fit for the ordinary purposes for which such goods are used; and
(d) run, within the variations permitted by the agreement, of even kind, quality
and quantity within each unit and among all units involved; and
(e) are adequately contained, packaged, and labeled as the agreement may require;
and
(f) conform to the promises or affirmations of fact made on the container or label
if any.
W. Va. Code § 46-2-314 (emphasis added). This statute is based on the Uniform Commercial
Code. See U.C.C. § 2-314. The implied warranty is created by operation of law, and is not
premised on a seller’s promises or representations beyond identifying the ordinary purpose of the
product.
Plavix’s ordinary purpose is to act as an anticoagulant. The FDA approved Plavix for its
blood-thinning properties in treating patients who experienced a recent heart attack, stroke, PAD,
or ACS. There is no indication that the FDA approval was related to Plavix’s efficacy compared
to aspirin and other alternatives. Also, this Court has reviewed the Plavix labeling information,
9
and has found nothing on that label suggesting that Plavix’s ordinary purpose was to act as a
superior alternative to aspirin or Aggrenox.6
Plaintiffs do not allege that Plavix was not fit for its ordinary purpose of being an
anticoagulant. Rather, Plaintiffs allege that Plavix was not better than alternatives such as aspirin
and Aggrenox. Under the U.C.C., claims about a product’s superiority over another product are
not part of the implied warranty of merchantability. RICHARD A. LORD, 18 WILLISTON
ON
CONTRACTS § 52:76 (4th ed. 2012) (footnotes omitted) (“As a general principle . . . the implied
warranty of merchantability requires only that the goods be fit for their ordinary purpose, not that
they be perfect or in perfect condition, or be outstanding or superior, or of the best or highest
quality.”); see also Sessa v. Riegle, 427 F. Supp. 760, 769 (E.D. Pa. 1977), aff’d, 568 F.2d 770
(3d Cir. 1978) (“The standard established [by U.C.C. § 2-314] does not require that goods be
outstanding or superior.”); Miller v. Badgley, 753 P.2d 530, 535 (Wash. Ct. App. 1988) (“In
order to be merchantable, goods need not be outstanding or superior . . . .”). Furthermore, “a
product that performs its ordinary functions adequately does not breach the warranty merely
because it does not function as well as the buyer would like . . . .” 18 WILLISTON ON CONTRACTS
§ 52:76 (footnote omitted).
6
Plaintiffs included Plavix labeling information, issued in February 2011, with their SAC. ECF
No. 48-4. Also, Defendants attach Plavix labeling information, dated March 2010, to their
motion to dismiss. ECF No. 50-2. The Court may properly take into account all such labeling
when considering a motion to dismiss. See Van Matre v. Boilermaker-Blacksmith Nat’l Pension
Trust, No. 3:10-cv-1291, 2011 WL 3684816, at *3 n.1 (S.D. W. Va. Aug. 23, 2011) (quoting
Witthohn v. Fed. Ins. Co., 164 Fed. App’x 395, 396 (4th Cir. 2006)) (“‘[A] court may consider
official public records, documents central to plaintiff’s claim, and documents sufficiently
referred to in the complaint so long as the authenticity of these documents is not disputed’
without converting a motion to dismiss into one for summary judgment”).
10
Iqbal and Twombly require that a cause of action be supported by factual allegations
sufficient to make the claim plausible. The factual allegations in the SAC concern affirmative
conduct by Defendants amounting to an express warranty7—that Plavix was superior to aspirin—
and do not suggest that Plavix was unfit or ineffective for its prescribed uses. Because of
Plaintiffs’ mischaracterization of Plavix’s ordinary purpose, Plaintiffs have failed to state a claim
for breach of implied warranty of merchantability, and this is sufficient grounds for dismissing
that claim.
Next the Court turns to Plaintiffs’ unjust enrichment claim. The elements of an unjust
enrichment claim are: “(1) a benefit conferred upon the [defendant], (2) an appreciation or
knowledge by the defendant of such benefit, and (3) the acceptance or retention by the defendant
of the benefit under such circumstances as to make it inequitable for the defendant to retain the
benefit without payment of its value.” Veolia Es Special Servs., Inc. v. Techsol Chem. Co., No.
3:07-cv-0153, 2007 WL 4255280, at * 9 (S.D. W. Va. Nov. 30, 2007) (citing 26 WILLISTON ON
CONTRACTS § 68:5 (4th ed.)). West Virginia specifically requires that the benefits were “received
and retained under such circumstance that it would be inequitable and unconscionable to permit
the party receiving them to avoid payment therefor.” See Realmark Devs., Inc. v. Ranson, 542
7
See W. Va. Code, § 46-2-313:
(1) Express warranties by the seller are created as follows:
(a) Any affirmation of fact or promise made by the seller to the buyer which
relates to the goods and becomes part of the basis of the bargain creates an
express warranty that the goods shall conform to the affirmation or promise.
(b) Any description of the goods which is made part of the basis of the bargain
creates an express warranty that the goods shall conform to the description.
Though a claim for breach of implied warranty of fitness for a particular purpose may also
theoretically be possible, Plaintiffs have not presented this claim either. See W. Va. Code, § 462-315.
11
S.E.2d 880, 884-85 (W. Va. 2000) (citing Copley v. Mingo Cnty. Bd. of Educ., 466 S.E.2d 139
(W. Va. 1995)).
The Court notes that at least one state allows unjust enrichment claims to be dismissed
when the underlying tort claim has also been dismissed. See, e.g., In re Yasmin & Yaz
(Drospirenone) Mktg., Sales Practices & Prods. Liab. Litig., No. 3:09-MD-02100-DRH, 2010
WL 3119499, at *9 (S.D. Ill. Aug. 5, 2010) (citing Allegheny Gen. Hosp. v. Philip Morris, Inc.,
228 F.3d 429 (3d Cir. 2000)) (dismissing unjust enrichment claim, under Pennsylvania law,
when fraud or misrepresentation claim had been dismissed). West Virginia law has no such
requirement, and so the Court’s dismissal of the breach of implied warranty claim would not
alone provide a sufficient basis for dismissing the unjust enrichment claim.
The Court nonetheless dismisses Plaintiffs’ unjust enrichment claim because, as with
their claim for breach of implied warranty of merchantability, Plaintiffs have not pled unjust
enrichment with sufficient plausibility to pass muster under Iqbal and Twombly. The SAC
alleges that Defendants misrepresented Plavix’s efficacy, Defendants “caused physicians to
prescribe Plavix to patients insured by Plaintiffs,” and that “Plaintiffs paid Defendants for these
Plavix prescriptions”—a benefit which Defendants have retained. ¶¶ 52-54. Plaintiffs also point
to Plavix’s high cost compared to aspirin. However, the SAC does not allege, let alone plausibly,
whether any prescriptions were written based on a misunderstanding of Plavix’s efficacy. Nor
does it allege how Defendants’ retention of payments for a product that was effective in its
ordinary purpose—though perhaps not as effective compared to other drugs as claimed—rises to
the level of constituting unjust enrichment.
12
In summary, the Court dismisses both of Plaintiffs’ causes of action for failure to state a
plausible claim.
III.
Pleading of Causation
Even if Plaintiffs had sufficiently alleged that Plavix failed to fulfill its ordinary purpose
and that Defendants’ retention of payments for Plavix—a drug which fulfilled its ordinary
purpose as an anticoagulant—constituted unjust enrichment, both claims would still be dismissed
for failure to sufficiently plead proximate causation.
Defendants claim that the causation between the alleged marketing activities and the
reimbursement of Plavix prescriptions is riddled with too many intervening events for the Court
to impose liability on Defendants. In support of their motion to dismiss, Defendants point to
Pennsylvania Employees Benefit Trust Fund v. AstraZeneca Pharmaceuticals LP, No. 6:09-cv5003-Orl-22DAB, 2009 WL 2231686 (M.D. Fla. July 20, 2009). In that case, a health and
welfare trust fund sued AstraZeneca for breach of express warranty and unjust enrichment, based
on AstraZeneca’s alleged misleading and false marketing of the drug Seroquel. The district court
held that reliance was a required element of the express warranty claim, and would have
dismissed on those grounds alone. See id. at *4 (“[T]he third party recipient of an express
warranty must be aware of the specific terms of the warranty in order to sustain a claim for
breach of that warranty. Thus, Plaintiff cannot simply rely on the prescription pads of physicians
or claims for reimbursement from pharmacies as a means by which express warranties were
conveyed.”).
That district court separately concluded, however, that the complaint also failed to allege
proximate causation, as distinct from reliance. In doing so, that court relied on its own earlier
13
discussion of proximate cause in Ironworkers Local Union No. 68 v. AstraZeneca
Pharmaceuticals LP, 585 F. Supp. 2d 1339 (M.D. Fla. 2008), aff’d on other grounds, 634 F.3d
1352 (11th Cir. 2011). Specifically, the district court stated that “[t]hough this Court’s opinion in
Ironworkers examined the issue of proximate cause primarily in the context of Plaintiffs’ federal
RICO claims, the reasoning underlying that opinion applies with equal force to the state claims
presented in this case.” Pa. Emps. Benefit Trust Fund, 2009 WL 2231686, at *5 (footnote
omitted). The court then noted that “physicians use their independent medical judgment to decide
whether Seroquel is the best treatment for a given patient,” and “[this] independent judgment can
be influenced by a number of things, only one of which may be representation by a manufacturer
as to a particular drug’s relative safety and efficacy.” Id., 2009 WL 2231686, at *5 (quoting
Ironworkers, 585 F. Supp. 2d at 1344). The court then dismissed for lack of proximate causation.
The district court decision in Ironworkers, affirmed on other grounds by the court of
appeals,8 examined class action RICO claims brought against AstraZeneca for false marketing of
Seroquel. In that case, the district court applied the Supreme Court’s “direct relation” standard of
proximate causation, found in Holmes v. Securities Investor Protection Corporation, 503 U.S.
8
The court of appeals affirmed Ironworkers not based on lack of causation, but rather on the
basis that TPPs “take into account all known risks that might cause [them] to pay for medically
unnecessary or inappropriate prescriptions” when they set their premiums, thus ensuring that
premiums cover costs regardless of whether prescriptions end up being given for inappropriate
reasons. 634 F.3d at 1368. When insurers decided to reimburse patients for prescriptions of a
given drug, “the insurers assumed the risk of paying for all prescriptions of drugs covered by
their policies, including medically unnecessary or inappropriate prescriptions—even those
caused by fraudulent marketing.” Id. at 1364. Neither Ironworkers opinion, however, is binding
on this Court, and this Court finds the causation reasoning used by the district court in
Ironworkers to be more persuasive than the court of appeal’s argument about economic injury.
14
258 (1992).9 Under that standard, proximate causation required “some direct relation between the
injury asserted and the injurious conduct alleged.” Ironworkers, 585 F. Supp. 2d at 1344 (quoting
Holmes, 503 U.S. at 268). The district court found proximate causation lacking for the RICO
claims based on that standard and the standard’s three underlying policies.10 Id. at 1344-45.
Furthermore, the district court applied similar reasoning to the state law claims for consumer
protection violations, common law fraud, and negligent misrepresentation, dismissing all of
those claims for lack of proximate causation. Id. at 1345-46.
Another district court has applied the Holmes “direct relation” proximate causation
standard, this time to misleading marketing claims against Bayer for its advertising of the
contraceptive drug YAZ. In re Yasmin, 2010 WL 3119499 (S.D. Ill. Aug. 5, 2010). That district
court, relying on Holmes, dismissed the plaintiffs’ civil RICO claims, and additionally dismissed
the plaintiffs’ common law negligence and misrepresentation claims. Id., 2010 WL 3119499, at
*7-9 (noting that “the proximate cause analysis for Plaintiffs’ common law actions mirrors the
9
The Supreme Court’s discussion of proximate causation in Holmes provides a general formula,
not just applicable to RICO claims. See Holmes, 503 U.S. at 268-69.
10
Those three policies, or factors, are as follows:
First, the less direct an injury is, the more difficult it becomes to ascertain the
amount of a plaintiff’s damages attributable to the violation, as distinct from
other, independent, factors. Second, quite apart from problems of proving factual
causation, recognizing claims of the indirectly injured would force courts to adopt
complicated rules apportioning damages among plaintiffs removed at different
levels of injury from the violative acts, to obviate the risk of multiple recoveries.
And, finally, the need to grapple with these problems is simply unjustified by the
general interest in deterring injurious conduct, since directly injured victims can
generally be counted on to vindicate the law as private attorneys general, without
any of the problems attendant upon suits by plaintiffs injured more remotely.
Holmes, 503 U.S. at 269-70 (citations omitted). The Supreme Court mentions that these policies
underlie Clayton Act causation, and “apply with equal force” to RICO claims. Id. at 269. This
Court likewise finds these policies to be persuasive in the causation analysis generally.
15
direct proximate cause analysis applicable in civil RICO actions”).
The Third Circuit Court of Appeals examined causation, and found it lacking, in In Re
Shering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235 (3d Cir. 2012). In
that case, patients and TPPs sought damages as a result of defendant pharmaceutical company’s
alleged illegal marketing of certain oncology and Hepatitis drugs for off-label use. Specifically,
the TPP claims were in connection with two Rebetol prescriptions. The court of appeals noted
that the TPP “has not established that its alleged injury is fairly traceable to [defendant]
Schering’s alleged wrongful conduct,” and therefore “the Complaint was properly dismissed for
lack of Article III standing.” Id. at 246. The TPP had argued that Shering falsely marketed other
drugs, Schering was the sole marketer of Rebetol, and therefore Shering’s misconduct in
marketing Rebetol could be inferred. The Third Circuit rejected this reasoning, explaining that
“[i]t is pure conjecture to conclude that because Schering’s misconduct caused other doctors to
write prescriptions for ineffective off-label uses for other products, [TPP] Local 331 ended up
paying for two prescriptions for Rebetol due to the same kind of misconduct.” Id. at 248.
These situations are distinguishable from that presented in In re Neurontin Marketing &
Sales Practices Litigation, where the District Court of Massachusetts entered judgment in favor
of Plaintiffs Kaiser Foundation Health Plan and Kaiser Foundation Hospitals on their claim
against Pfizer under California’s Unfair Competition Law, in relation to Pfizer’s marketing of the
drug Neurontin. No. 04-CV-10739-PBS, 2011 WL 3852254 (D. Mass. Aug. 31, 2011). In
support of this judgment, the court noted that defendants had made misrepresentations about
Neurontin directly to and concealed information directly from Kaiser’s Drug Information Service
(“DIS”), which is responsible for researching drugs and forwarding drug information to the
16
committees that ultimately decide what drugs to approve for prescription by doctors. Id. at *56.11
These direct communications included defendants’ responses to DIS questions about proper drug
usage. Id. at *29. This helped establish the causation necessary for Plaintiffs to succeed on their
claim.
The courts in the above cases all engaged in necessary line-drawing to limit the
permissible scope of recovery when an alleged injury involves a potentially complex chain of
causation with many intervening events. The Supreme Court of Appeals of West Virginia
engaged in similar line drawing in White v. Wyeth, 705 S.E.2d 828 (W. Va. 2010), where
individuals who purchased and used certain hormone replacement therapy drugs sought damages
from drug manufacturer Wyeth and an advertising agency. The plaintiffs alleged that the
defendants engaged in unfair and deceptive advertising and marketing practices, in violation of
the West Virginia Consumer Credit and Protection Act (“WVCCPA”). In the course of
answering a certified question about the pleading of reliance under the WVCCPA, the court
examined the nature of the acts alleged. Specifically, “when consumers allege that a purchase
was made because of an express or affirmative misrepresentation, the causal connection between
the deceptive conduct and the loss would necessarily include proof of reliance on those overt
representations.” Id. at 837 (citations omitted). In contrast, “[w]here concealment, suppression or
omission is alleged, and proving reliance is an impossibility, the causal connection between the
11
The district court examined misrepresentation and concealment in the context of assessing
reliance, which is a required element under California’s Unfair Competition Law. Although
reliance is not necessarily required in the instant case, In re Neurontin’s discussion of specific
direct communications with Kaiser provides an illustrative contrast to the cases above where
causation was found lacking.
17
deceptive act and the ascertainable loss is established by presentation of facts showing that the
deceptive conduct was the proximate cause of the loss.” Id. at 837.
In the end, however, the court found that the statutory consumer action at issue, West
Virginia Code Section 46A-6-106(a), and the WVCCPA generally, did not apply to private
causes of action related to prescription drugs. Id. 837-38. This is because doctors, rather than
consumers, select which drugs to prescribe to an individual, and consumers are thereby protected
by the doctor’s medical judgment. Id. (citations omitted). White examines a cause of action under
the WVCCPA, which has its own statutory purposes, as distinct from the causes of action in the
instant case. Therefore, although Plaintiffs’ allegations characterize Defendants’ wrongful
conduct as the types of affirmative acts which would require reliance under White, this Court
hesitates to find that Plaintiffs must prove reliance in the present case.12 Nonetheless, White has
some application here, and can guide this Court’s analysis of proximate causation and linedrawing.
In summary, Holmes and the other cases above suggest that the proximate causation
analysis is about carefully drawing a line so as to distinguish the direct consequences in a close
causal chain from more attenuated effects influenced by too many intervening causes. Based on
the foregoing, this Court is persuaded that the proximate causation analysis for both of Plaintiffs’
claims should be similar to that utilized in claims for consumer fraud and RICO, as well as other
12
Plaintiffs concede they did not allege reliance other than in a conclusory fashion, if at all. It is
not clear if reliance must be pled in express warranty claims under West Virginia law. See
Michael v. Wyeth, LLC, No. 2:04-cv-0435, 2011 WL 2150112, at *8 (S.D. W. Va. May 25,
2011) (noting open question of whether reliance is required, and “anticipat[ing] that West
Virginia’s high court would follow the rebuttable presumption approach” to the issue of reliance,
meaning that reliance need not be proven). Resolution of whether reliance is required is
unnecessary, however, because of the sufficient grounds that otherwise exist for dismissal of
both claims.
18
state law claims, as outlined above. Although the cases discussed involve various causes of
action, they all use the same guiding principles in assessing proximate causation, and this Court
is guided by those same principles in the instant case. The Court finds that Plaintiffs’ claims do
not satisfy the “direct relation” test found in Holmes and affirmed by the district court in
Ironworkers, and also finds that the policies announced in Holmes weigh in favor of dismissal
here. Between Defendants’ alleged misleading marketing and Plaintiffs’ prescription
reimbursements lies a vast array of intervening events, including the “independent medical
judgment” of doctors. Ironworkers, 585 F. Supp. 2d at 1344. Without any specific allegations as
to who received these misrepresentations, how the misrepresentations influenced doctors, and
why certain patients received Plavix instead of alternative medications, this Court is left without
sufficient allegations from which to properly infer that proximate causation is satisfied.
Therefore, both of Plaintiffs’ claims should be dismissed for lack of causation.
Because the Court has found other grounds which provide sufficient justification for
dismissing both of Plaintiffs’ claims, the Court need not reach the issue of whether Plaintiffs’
claims sound in fraud and, if so, whether Plaintiffs’ claims satisfy the higher pleading standard
mandated under Federal Rule of Civil Procedure 9(b). Similarly, this Court summarily rejects,
without having to reach, Defendants’ economic-injury-in-fact argument grounded in the court of
appeals’ Ironworkers decision for the reasons stated earlier. This Court likewise need not discuss
application of the passing-on defense.
Conclusion
For the reasons stated above, the Court GRANTS Defendants’ motion to dismiss (ECF
No. 50), and DISMISSES Plaintiffs’ Second Amended Complaint (ECF No. 48) in its entirety.
19
The Court also GRANTS Plaintiffs’ motion for leave to file a supplemental memorandum (ECF
No. 70), and has considered the proposed supplemental memorandum.
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to
counsel of record and any unrepresented parties.
ENTER:
20
January 29, 2013
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