Painters & Allied Trades Dist. Council 82 Health Care Fund v. Takeda Pharm. Co.

• Decision Date: 19 February 2021
• Docket Number: Case No. 2:17-cv-07223-JWH-ASx
• Citation: 520 F.Supp.3d 1258
• Parties: PAINTERS AND ALLIED TRADES DISTRICT COUNCIL 82 HEALTH CARE FUND, a third-party healthcare payor fund, Annie M. Snyder, a California consumer, Rickey D. Rose, a Missouri consumer, John Cardarelli, a New Jersey consumer, Marlyon K. Buckner, a Florida consumer, and Sylvie Bigord, a Massachusetts consumer, on behalf of themselves and All others similarly situated, Plaintiffs, v. TAKEDA PHARMACEUTICAL COMPANY LIMITED, a Japanese corporation; Takeda Pharmaceuticals USA, Inc., an Illinois corporation (fka Takeda Pharmaceuticals North America, Inc. ); and Eli Lilly & Company, an Indiana corporation, Defendants.
• Court: U.S. District Court — Central District of California

520 F.Supp.3d 1258

PAINTERS AND ALLIED TRADES DISTRICT COUNCIL 82 HEALTH CARE FUND, a third-party healthcare payor fund, Annie M. Snyder, a California consumer, Rickey D. Rose, a Missouri consumer, John Cardarelli, a New Jersey consumer, Marlyon K. Buckner, a Florida consumer, and Sylvie Bigord, a Massachusetts consumer, on behalf of themselves and All others similarly situated, Plaintiffs,

v.TAKEDA PHARMACEUTICAL COMPANY LIMITED, a Japanese corporation; Takeda Pharmaceuticals USA, Inc., an Illinois corporation (fka Takeda Pharmaceuticals North America, Inc. ); and Eli Lilly & Company, an Indiana corporation, Defendants.

Case No. 2:17-cv-07223-JWH-ASx

United States District Court, C.D. California.

Signed February 19, 2021

Michael Lin Baum, R. Brent Wisner, Monique Amanda Alarcon, Pedram Esfandiary, Baum Hedlund Aristei and Goldman PC, Los Angeles, CA, Christopher L. Coffin, Pro Hac Vice, Pendley Baudin and Coffin LLP, New Orleans, LA, Nicholas R. Rockforte, Pro Hac Vice, Pendley Baudin and Coffin LLP, Plaquemine, LA, for Plaintiff Painters & Allied Trades District Council 82 Health Care Fund.

Michael Lin Baum, R. Brent Wisner, Monique Amanda Alarcon, Pedram Esfandiary, Baum Hedlund Aristei and Goldman PC, Los Angeles, CA, for Plaintiffs Annie M Snyder, Rickey D Rose, John Cardarelli, Marlyon K Buckner.

R. Brent Wisner, Monique Amanda Alarcon, Pedram Esfandiary, Baum Hedlund Aristei and Goldman PC, Los Angeles, CA, for Plaintiff Sylvie Bigord.

D'Lesli M. Davis, Pro Hac Vice, Katherine P. Lett, Pro Hac Vice, Norton Rose Fulbright LLP, Dallas, TX, Darryl W. Anderson, Pro Hac Vice, Geraldine W. Young, Pro Hac Vice, Norton Rose Fulbright LLP, Houston, TX, Mollie Fleming Benedict, Su-Lyn Combs, Tucker Ellis LLP, Los Angeles, CA, for Defendants Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals USA Inc.

D'Lesli M. Davis, Pro Hac Vice, Katherine P. Lett, Pro Hac Vice, Norton Rose Fulbright LLP, Dallas, TX, Darryl W. Anderson, Pro Hac Vice, Geraldine W. Young, Pro Hac Vice, Norton Rose Fulbright LLP, Houston, TX, Mike H. Madokoro, Bowman and Brooke LLP, Torrance, CA, Mollie Fleming Benedict, Su-Lyn Combs, Tucker Ellis LLP, Los Angeles, CA, Randall L. Christian, Pro Hac Vice, Bowman and Brooke LLP, Austin, TX, for Defendant Eli Lilly and Company.

ORDER ON MOTION OF DEFENDANTS TAKEDA PHARMACEUTICAL COMPANY LIMITED AND TAKEDA PHARMACEUTICALS USA, INC. TO DISMISS UNDER RULES 12(b)(6) AND 9(b) AND/OR MOTION TO STRIKE CLASS ALLEGATIONS UNDER RULE 12(f) [ECF No. 173] and JOINDER OF ELI LILLY & COMPANY THERETO [ECF No. 174]

John W. Holcomb, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

On August 21, 2020, Defendants Takeda Pharmaceutical Company Limited and Takeda Pharmaceuticals USA, Inc. (jointly, "Takeda") filed their motion to dismiss Plaintiffs’ Second Amended Complaint pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure and to strike Plaintiffs’ class allegations under Rule 12(f).¹ Defendant Eli Lilly & Company ("Lilly") filed a joinder in the Motion.² For the reasons stated below, the Court DENIES Takeda's Motion and DENIES Lilly's Joinder.

II. PROCEDURAL BACKGROUND

This putative class action was originally filed as part of a multi-district litigation in the Western District of Louisiana, MDL No. 6:11-md-2299 (the "MDL Court"), that consolidated claims related to the drug Actos

.³ This case differs from the MDL cases because Plaintiffs here do not assert personal injury or product liability claims, but, rather, they allege that Takeda and Lilly conspired to market Actos fraudulently by concealing the association between its use and the development of bladder cancer.⁴ On September 26, 2017, the MDL Court ordered this case transferred to this district.⁵ On December 12, 2017, Plaintiffs filed a Second Amended Complaint. The SAC asserts claims for relief under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 – 1968 ("RICO"), and state consumer fraud laws.⁶

On February 1, 2018, the Court dismissed this case, finding that Plaintiffs had not adequately pleaded causation.⁷ That decision was reversed in Painters & Allied Trades Dist. Council 82 Health Care Fund v. Takeda Pharm. Co. Ltd. , 943 F.3d 1243 (9th Cir. 2019), cert. denied , ––– U.S. ––––, 141 S. Ct. 86, 207 L.Ed.2d 171 (2020). The Ninth Circuit held that Plaintiffs adequately alleged proximate causation to support their civil RICO claim and remanded the case for further proceedings. Id. at 1260. On August 21, 2020, Takeda filed the instant Motion and Lilly filed its Joinder, which adopts the contentions in Takeda's Motion and raises additional arguments specific to Lilly.

III. SUMMARY OF FACTUAL ALLEGATIONS

Takeda Pharmaceuticals USA, Inc., its parent company Takeda Pharmaceutical Company Ltd., and Eli Lilly & Co. developed and marketed a diabetes

drug called Actos. Id. at 1246. Takeda obtained FDA approval for Actos in 1999. Id. Plaintiffs "allege that despite learning through multiple studies over the next several years that Actos increased a patient's risk of developing bladder cancer, Defendants refused to change Actos's warning label or otherwise inform the public of such risk." Id.

Plaintiffs contend that Takeda and Lilly misled the FDA regarding the risk of bladder cancer

by generating false studies, manipulating study results, and controlling the messaging about Actos to conceal aspects of the drug's mechanism that could have raised concerns.⁸ Plaintiffs also allege that Takeda and Lilly misled prescribing physicians, consumers, and third-party payors into believing that Actos did not create an increased risk of bladder cancer.⁹ According to Plaintiffs, Takeda and Lilly had reason to know about the increased bladder cancer risk but chose not to disclose it to increase profits from the sale of Actos.¹⁰

After the bladder cancer

risk became known, sales of Actos dropped precipitously.¹¹ A group of patients who developed bladder cancer and their families brought personal injury and wrongful death claims against Takeda and Lilly, and those claims were consolidated in the MDL case in the Western District of Louisiana. See

Painters & Allied Trades , 943 F.3d at 1246.¹² The MDL Court conducted a 37-day "bellwether" trial in 2014, and the jury returned a verdict in favor of the plaintiffs.¹³ The MDL Court concluded, among other things, that "the Plaintiffs presented evidence that the Defendants were aware of the risk of death by way of bladder cancer associated with Actos ® use and that they chose to conceal and obfuscate those risks in order to sell more product and to increase their profit."¹⁴

The instant action was filed by five individual patients and Painters and Allied Trades District Council 82 Health Care Fund ("Painters"), a third-party payor.¹⁵ The individual patients allege that neither they nor their physicians knew that Actos

increased the risk of bladder cancer and that they would not have purchased Actos had they known.¹⁶ Painters claims that, as a result of the "fraudulent concealment of the bladder cancer risk," it "reimbursed a significant number of claims at potentially elevated prices for Actos" that would not have been reimbursed "but for the fraud."¹⁷

IV. LEGAL STANDARDS

A defendant may move to dismiss for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). To survive such a motion, the complaint must articulate "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A complaint need not contain "detailed factual allegations," but it must contain "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Id. at 555, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

To state a RICO cause of action under 18 U.S.C. § 1964(c), a plaintiff must allege " ‘(1) conduct (2) of an enterprise (3) through a pattern (4) of racketeering activity (known as ‘predicate acts’) (5) causing injury to the plaintiff's ‘business or property.’ " Abcarian v. Levine , 972 F.3d 1019, 1028 (9th Cir. 2020) (quoting Grimmett v. Brown , 75 F.3d 506, 510 (9th Cir. 1996) ). In addition, a plaintiff must meet the pleading requirements of Rule 9(b) of the Federal Rules of Civil Procedure if the RICO claim is based upon allegations of fraud. See, e.g., Edwards v. Marin Park, Inc. , 356 F.3d 1058, 1065–66 (9th Cir. 2004) ( Rule 9(b) "applies to civil RICO fraud claims").

"Rule 9(b) demands that the circumstances constituting the alleged fraud be ‘specific enough to give defendants notice of the particular misconduct ... so that they can defend against the charge and not just deny that they have done anything wrong.’ " Kearns v. Ford Motor Co. , 567 F.3d 1120, 1124 (9th Cir. 2009) (quoting Bly–Magee v. California , 236 F.3d 1014, 1019 (9th Cir. 2001) ). "Any averments which do not meet that standard should be ‘disregarded,’ or ‘stripped’ from the claim for failure to satisfy Rule 9(b)." Id. "Averments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett , 137 F.3d 616, 627 (9th Cir. 1997) ).

" Federal Rule of Civil Procedure 9(b) provides that ‘[i]n alleging fraud ..., a party must state with particularity the circumstances constituting fraud,’ while ‘[m]alice, intent, knowledge, and other conditions of a person's mind may be averred generally.’ " Sanford v. MemberWorks, Inc. , 625 F.3d 550, 557–58 (9th Cir. 2010) (quoting Fed. R. Civ. P. 9(b) ). "Consequently, ‘[t]he only aspects of wire [or mail] fraud that require particularized allegations are the factual circumstances of the fraud...