Cleveland Bakers & Teamsters Health & Welfare Fund v. Purdue Pharma, L.P. (In re Nat'l Prescription Opiate Litig.)

• Decision Date: 21 February 2020
• Docket Number: MDL 2804,Case No. 1:17-md-2804
• Citation: 440 F.Supp.3d 773
• Parties: IN RE: NATIONAL PRESCRIPTION OPIATE LITIGATION This Document Relates To: Cleveland Bakers and Teamsters Health and Welfare Fund, et al. v. Purdue Pharma, L.P., et al., Case No. 1:18-op-45432-DAP
• Court: U.S. District Court — Northern District of Ohio

440 F.Supp.3d 773

IN RE: NATIONAL PRESCRIPTION OPIATE LITIGATION

This Document Relates To: Cleveland Bakers and Teamsters Health and Welfare Fund, et al. v. Purdue Pharma, L.P., et al., Case No. 1:18-op-45432-DAP

MDL 2804

Case No. 1:17-md-2804

United States District Court, N.D. Ohio, Eastern Division.

Filed: February 21, 2020

OPINION AND ORDER

DAN AARON POLSTER, UNITED STATES DISTRICT JUDGE

On June 18, 2018, Plaintiffs, Cleveland Bakers and Teamsters Health and Welfare Fund ("Cleveland Bakers") and Pipe Fitters Local Union No. 120 Insurance Fund ("Pipe Fitters") (collectively "Plaintiffs" or "Funds"), filed their First Amended Complaint (Doc. #: 635). On December 20, 2019, Plaintiffs filed their Corrected Unredacted Amended Complaint (Doc. #: 3031) (the "Complaint").¹ The Complaint identifies two categories of defendants: Marketing Defendants² and Distributor Defendants.³ The Marketing Defendants are generally described by Plaintiffs as having "packaged, distributed, supplied, sold, placed into the stream of commerce, labeled, described, marketed, advertised, promoted, and purported to warn or purported to inform prescribes and users regarding the benefits and risks associated with the use of the prescription opioid drugs." Doc. #: 3031 at ¶ 35. The Distributor Defendants are described by Plaintiffs as wholesale pharmaceutical distributors who distributed, supplied, sold, and placed prescription opioids into the stream of commerce without fulfilling their alleged duty to detect and warn of the diversion of these drugs for non-medical purposes. See id. at ¶ 79. Four of the Distributor Defendants—CVS, Rite Aid, Walgreens, and Walmart—are also National Retail Pharmacies (the "Pharmacies" or "Pharmacy Defendants"). See id. ¶ 93. Plaintiffs refer to the Marketing Defendants and the Distributor Defendants collectively as "Defendants." See id. at ¶ 14. The Court will do the same.

The Complaint describes the following eleven causes of action:

Federal Law Claims

Count 1 Violation of RICO, 18 U.S.C. § 1961, et seq. – Opioid Marketing Enterprise (against Purdue, Cephalon, Janssen, Endo and Mallinckrodt);

Count 2 Violation of RICO, 18 U.S.C. § 1961, et seq. – Opioid Supply Chain Enterprise (against Purdue, Cephalon, Endo, Mallinckrodt, Actavis, McKesson, Cardinal, and AmerisourceBergen);

State Law Claims

Count 3 Violation of the Ohio Corrupt Practices Act Ohio Revised Code § 2923.31, et seq. – Opioid Marketing Enterprise (against Purdue, Cephalon, Janssen, Endo, and Mallinckrodt);

Count 4 Violation of the Ohio Corrupt Practices Act Ohio Revised Code § 2923.31, et seq. – Opioid Supply Chain Enterprise (against Purdue, Cephalon, Endo, Mallinckrodt, Actavis, McKesson, Cardinal and AmerisourceBergen); Count 5 Statutory Public Nuisance (against all Defendants);

Count 6 Common Law Absolute Public Nuisance (against all Defendants);

Count 7 Negligence (against all Defendants);

Count 8 Common Law Fraud (against the Marketing Defendants);

Count 9 Injury Through Criminal Acts– Ohio Revised Code § 2307.60 (against all Defendants);

Count 10 Unjust Enrichment (against all Defendants); and

Count 11 Civil Conspiracy (against all Defendants).

On July 23, 2018, two groups of defendants—Manufacturer Defendants⁴ and Distributor Defendants⁵ —filed motions to dismiss the First Amended Complaint. On July 24, 2018, the Pharmacies filed a motion to dismiss.⁶ On August 20, 2018, Plaintiffs filed an omnibus response in opposition to the motions to dismiss. See Doc. #: 893. On September 10, 2018, Defendants filed reply briefs. See Doc. ##: 867, 868, 869. This order addresses all three motions.⁷

I. Legal Standards

A. The 12(b)(6) Standard.

When considering a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a court is "required to ‘accept all well-pleaded factual allegations of the complaint as true and construe the complaint in the light most favorable to the plaintiff.’ " Dinwiddie v. Beshear , 2019 WL 4009835, at *2 (6th Cir. April 24, 2019) (quoting Dubay v. Wells , 506 F.3d 422, 426 (6th Cir. 2007) ; see also Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Federal courts require only ‘notice pleadings’ containing "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Accordingly, "a complaint need not contain ‘detailed factual allegations,’ however, it requires more than ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action.’ " Dinwiddie , 2019 WL 4009835, at *2 (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Rule 8 "demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation," and a complaint will not "suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ).

A complaint will survive a motion to dismiss if it "contain[s] 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, 127 S.Ct. 1955 ). Facial plausibility exists "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). Deciding if a complaint states a plausible claim for relief is context-specific and a court must draw on its judicial experience and common sense. See id. at 679, 129 S.Ct. 1937. A district court may dismiss a complaint for failure to state a claim ‘only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.’ " Trollinger v. Tyson Foods, Inc. , 370 F.3d 602, 615 (6th Cir. 2004) (quoting Swierkiewicz v. Sorema N.A. , 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) ; Hishon v. King & Spalding , 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984) ).

B. The 12(b)(1) Standard.

In addition to seeking dismissal for failure to state a claim, the Pharmacy Defendants seek dismissal pursuant to Federal Rule of Civil Procedure 12(b)(1). See Doc. #: 773-1 at 2-4. Rule 12(b)(1) allows dismissal if there is a "lack of jurisdiction over the subject matter." Fed. R. Civ. P. 12(b)(1). If it does not have subject matter jurisdiction, a court must dismiss the action. See Fed. R. Civ. P. 12(h)(3) ; see also Thornton v. S.W. Detroit Hosp. , 895 F.2d 1131, 1133 (6th Cir. 1990). The Rule 12(b)(1) standard of review depends on whether the defendant makes a facial or factual challenge to subject matter jurisdiction. See Wayside Church v. Van Buren County , 847 F.3d 812, 816-17 (6th Cir. 2017). A facial attack questions only the sufficiency of the pleadings. See Gentek Bldg Prods., Inc. v. Sherwin-Williams Co. , 491 F.3d 320, 330 (6th Cir. 2007). A factual attack requires a district court to weigh conflicting factual evidence to determine if subject-matter exists. See id.

Here, the Pharmacies have made a facial attack on the Complaint; therefore, as with a Rule 12(b)(6) motion, the Court must accept the allegations in the complaint as true, drawing all inferences in favor of the plaintiff, and determine whether Plaintiffs have stated a plausible claim. Gaylor v. Hamilton Crossing CMBS , 582 Fed. Appx. 576, 579 (6th Cir. 2014) (citations omitted). Although Plaintiffs have the burden when subject matter jurisdiction is challenged, this is not an onerous burden. Musson Theatrical Inc. v. Fed. Express Corp. , 89 F.3d 1244, 1248 (6th Cir. 1996). " ‘[G]eneral factual allegations of injury resulting from the defendant's conduct may suffice’ because in considering a motion to dismiss, ‘we presume that general allegations embrace those specific facts that are necessary to support the claim.’ " Gaylor , 582 Fed. Appx. at 579 (quoting Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

II. The Complaint's Factual Allegations

Much of the 341-page Complaint filed by the Funds is copied verbatim or otherwise derived from the complaints filed in Summit County and in The County of Cuyahoga, Ohio v. Purdue Pharma L.P., 17-md-2804 ("Cuyahoga County "). The Court summarized relevant factual allegations of these complaints previously and will not re-state them here. See Doc. #: 1025, Doc. #: 1203.⁸ Factual allegations in the Complaint that differ materially from those previously summarized are addressed below.

A. The Plaintiffs.

Similar to insurance companies, the two Plaintiff Funds provide health and welfare benefits to members of their respective unions. See Doc. #: 3031 at ¶¶ 28-29. Both Plaintiffs are headquartered in Cuyahoga County, Ohio. See id. at ¶ 638. Unlike the plaintiffs in Summit County and Cuyahoga County , neither Plaintiff is a governmental entity. Instead, Plaintiffs are private third-party payors ("TPPs") who indirectly purchased, paid for, and/or reimbursed others for the costs of opioids intended for consumption by their covered participants and their dependents.⁹ See id. at ¶¶ 28-29.

To qualify for payment or reimbursement by Plaintiffs, a prescription opioid had to be listed on a Plaintiff's formulary. A formulary is a "list of prescription drugs covered by a prescription drug plan or another insurance plan offering prescription drug benefits." https://www.healthcare.gov/glossary/formulary. In essence, "[a]ccess to the formulary is the ‘ticket’ that ensures that TPPs will pay" for prescriptions. In re Testosterone Replacement Therapy Prods. Liab. Litig. , 159 F. Supp. 3d 898, 914 (N.D. Ill. 2016). Plaintiffs also paid for hospital stays, emergency department visits, and medications associated with opioid misuse, addiction, and overdose. See, e.g., Doc. #: 3031 at ¶ 960.

B. Plaintiffs' Third-Party Administrators and their Pharmacy Benefits Managers.

To assist with providing prescription benefits to their members, Plaintiffs...