712 F.3d 60 (1st Cir. 2013), 11-1806, In re Neurontin Marketing and Sales Practices Litigation

Docket Nº:11-1806.
Citation:712 F.3d 60
Opinion Judge:LYNCH, Chief Judge.
Party Name:In re NEURONTIN MARKETING AND SALES PRACTICES LITIGATION. v. Pfizer, Inc.; Warner-Lambert Company LLC, Defendants, Appellees. Harden Manufacturing Corporation, individually and on behalf of itself and all others similarly situated; ASEA/AFSCME Local 52Health Benefits Trust; Louisiana Health Service Indemnity Company, d/b/a Blue Cross Blue Shield of
Attorney:Thomas M. Greene, with whom Michael Tabb, Ilyas J. Rona, Ryan P. Morrison, and Greene LLP were on brief, for appellants. John H. Beisner, with whom Mark S. Cheffo, Katherine A. Armstrong, and Skadden, Arps, Slate, Meagher & Flom LLP were on brief, for appellees.
Judge Panel:Before LYNCH, Chief Judge, SOUTER,[*] Associate Justice, and LIPEZ, Circuit Judge.
Case Date:April 03, 2013
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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712 F.3d 60 (1st Cir. 2013)

In re NEURONTIN MARKETING AND SALES PRACTICES LITIGATION.

Harden Manufacturing Corporation, individually and on behalf of itself and all others similarly situated; ASEA/AFSCME Local 52Health Benefits Trust; Louisiana Health Service Indemnity Company, d/b/a Blue Cross Blue Shield of Louisiana, Plaintiffs, Appellants,

International Union of Operating Engineers, Local No. 68 Welfare Fund, on behalf of itself, all others similarly situated; Lorraine Kopa, on behalf of herself, all others similarly situated; Gerald Smith, on behalf of himself, all others similarly situated; Jeanne Ramsey, on behalf of herself, all others similarly situated; Carolyn Hollaway, on behalf of herself, all others similarly situated; Gary Varnam, on behalf of himself, all others similarly situated; Jan Frank Wityk, on behalf of herself, all others similarly situated, Plaintiffs,

v.

Pfizer, Inc.; Warner-Lambert Company LLC, Defendants, Appellees.

No. 11-1806.

United States Court of Appeals, First Circuit.

April 3, 2013

Page 61

Thomas M. Greene, with whom Michael Tabb, Ilyas J. Rona, Ryan P. Morrison, and Greene LLP were on brief, for appellants.

John H. Beisner, with whom Mark S. Cheffo, Katherine A. Armstrong, and Skadden, Arps, Slate, Meagher & Flom LLP were on brief, for appellees.

Before LYNCH, Chief Judge, SOUTER,[*] Associate Justice, and LIPEZ, Circuit Judge.

LYNCH, Chief Judge.

This appeal by Harden Manufacturing Corporation and others (together, " Harden plaintiffs" ) is one of three that arose from multidistrict litigation (" MDL" ) concerning the off-label marketing of Neurontin, an anticonvulsant drug manufactured by Pfizer, Inc. Today we issue our decisions in Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc. (Kaiser), 712 F.3d 21, Nos. 11-1904, 11-2096, 2013 WL 1320408 (1st Cir.2013), and Aetna, Inc. v. Pfizer, Inc. (Aetna), 712 F.3d 51, No. 11-1595, 2013 WL 1320403 (1st Cir.2013), which are relevant to this appeal. We assume familiarity with both opinions, which dispose of many of Pfizer's arguments, and limit our discussion here to the issues particular to this appeal.

The Harden plaintiffs, representing a putative class of third-party payors (" TPPs" ), ask us to reverse both the district court's grant of summary judgment to Pfizer and the court's denial of class certification on the plaintiffs' claims under section 1962 of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961-1968, the New Jersey Consumer Fraud Act (NJCFA), N.J. Stat. Ann. §§ 56:8-1 to 56:8-195, and state common law claims of fraud and unjust enrichment. The core of the plaintiffs' claims, as in Kaiser and Aetna, is the allegation that Pfizer engaged in a fraudulent off-label

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marketing campaign that caused the TPPs to pay for Neurontin prescriptions that were ineffective for the off-label conditions at issue, and that the plaintiffs suffered injury when they paid for those prescriptions. The details of these allegations are described in the district court's opinion in In re Neurontin Mktg. & Sales Practices Litig. (Harden II), 257 F.R.D. 315, 317-18 (D.Mass.2009). The Harden plaintiffs' appeal is limited to only the claims regarding the off-label use of Neurontin for bipolar disorder, as to both the summary judgment and the class certification issues.

The plaintiffs argue that the district court erred in concluding that they failed to present a genuine issue of material fact as to whether their injuries were caused by Pfizer's conduct. They also argue that the district court abused its discretion in denying class certification on the basis of a finding that individual issues of causation and damages would predominate.

Based on the same reasoning we set forth in Kaiser and Aetna, and applying the facts of record here, we reverse the grant of summary judgment as to the plaintiffs' RICO claim. Based on the record evidence, the Harden plaintiffs are not so differently situated from Kaiser that they should be precluded from proving their case to a jury. The district court considered the Harden plaintiffs' failure to show any direct reliance on Pfizer's misrepresentations in making decisions about their formularies, together with the plaintiffs' use of aggregate evidence of causation, to be inadequate to survive summary judgment. We disagree. We also vacate the grant of summary judgment as to the state law claims. In light of our decision regarding summary judgment, we vacate the denial of class certification and remand for further proceedings consistent with this opinion.

I.

The putative class representatives in this appeal are Harden Manufacturing Corporation, a self-insured employer; ASEA/AFSCME Local 52 Health Benefits Trust, a public employee union health benefits trust; and Louisiana Health Service Indemnity Corporation, d/b/a Blue Cross Blue Shield of Louisiana, a nonprofit health insurance provider.1 See In re Neurontin Mktg. & Sales Practices Litig. (Harden III), 754 F.Supp.2d 293, 307-08 (D.Mass.2010). The Harden plaintiffs are all TPPs; that is, they pay for the costs of drugs prescribed for their members. They currently seek to represent a nationwide class of TPPs who reimbursed for Neurontin prescriptions for the off-label condition of bipolar disorder between 1994 and 2004.

We review the record on summary judgment as it stood when the district court ruled. Lewis v. City of Boston, 321 F.3d 207, 214 n. 7 (1st Cir.2003). In this case, the district court completed the trial that formed the basis of the Kaiser appeal before rendering summary judgment as to the Harden plaintiffs, and the court relied on the facts adduced in that trial when granting summary judgment here.2 See Harden III, 754 F.Supp.2d at 296. Accordingly, in this decision we adopt the facts concerning Pfizer's development and

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marketing of Neurontin as we explained them in Kaiser, 712 F.3d at 27-28, 31.

Harden filed its class action complaint against Pfizer 3 in U.S. District Court in Massachusetts on May 14, 2004. On August 8, 2005, the present named plaintiffs moved to certify a nationwide class under Fed.R.Civ.P. 23(a) and 23(b)(3). At that time, the proposed class consisted of all TPPs that had purchased or reimbursed for Neurontin for a number of off-label uses between January 1, 1994 and December 31, 2004. 4 In re Neurontin Mktg. & Sale Practices Litig. (Harden I), 244 F.R.D. 89, 91-92 (D.Mass.2007). The district court initially denied the motion without prejudice on August 29, 2007, finding, inter alia, that the commonality requirement was not met. Id. at 105, 115.

Significantly, Pfizer had also argued in response to this motion that class certification was inappropriate because the Harden plaintiffs could not prove causation on a class-wide basis, but rather would have to prove for each class member: (1) that its physicians were personally exposed to off-label marketing that contained false statements or material omissions, (2) that such statements or omissions in the marketing materials caused those doctors to issue the prescriptions, and (3) that the prescriptions were ineffective for those doctors' patients. Id. at 109. At the time the district court decided the motion, the plaintiffs had commissioned, but had not yet received, an expert report from Dr. Meredith Rosenthal, which the plaintiffs expected to use to prove causation by aggregate data analysis.5 Id. at 109-110. While the district court expressed some reservations about the Harden plaintiffs' proposed method of proof, it did not make any definitive rulings on causation due to the limited record. See id. at 110-15.

On December 19, 2007, the Harden plaintiffs renewed their motion for class certification. The district court denied the motion on May 13, 2009. Harden II, 257 F.R.D. at 333. The court found that the plaintiffs had overcome the commonality problem by splitting the TPP class into multiple subclasses that were specific to the off-label indications for which Neurontin had been prescribed, id. at 319, but that this time, the motion failed on the basis of predominance, see id. at 317, 331-33. The court concluded that the plaintiffs could not use statistical evidence to establish class-wide causation in a consumer fraud claim under either RICO or the NJCFA. See id. at 323-33. While Dr. Rosenthal's regression analysis showed that " essentially all" Neurontin prescriptions for bipolar disorder were the result of Pfizer's off-label marketing, id. at 329, the court found that the Rosenthal report nonetheless could not provide class-wide evidence of causation because it did not take account of doctors' individual prescribing decisions or the possibility that some of Pfizer's off-label marketing might not have been fraudulent, see id. at 330-31. The court then reasoned that the TPPs could alternatively show causation by evidence that they had directly relied on Pfizer's misrepresentations in deciding how to

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treat Neurontin on their formularies (the lists of drugs for which TPPs agree to reimburse). See id. at 333. But because of the TPPs' heterogeneity in their processes of constructing and managing their formularies, id. at 332, such reliance could not be shown by proof common to the class, id. at 333.

On May 28, 2009, the Harden plaintiffs moved for reconsideration as to the bipolar subclass only. This motion would not be resolved until after a series of other proceedings.

In March 2009, while the second class certification motion was pending...

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