City & Cnty. of S.F. v. Purdue Pharma L.P.

• Decision Date: 30 September 2020
• Docket Number: Case No. 3:18-cv-07591-CRB
• Citation: 491 F.Supp.3d 610
• Court: U.S. District Court — Northern District of California
• Parties: CITY AND COUNTY OF SAN FRANCISCO, et al., Plaintiffs, v. PURDUE PHARMA L.P., et al., Defendants.

491 F.Supp.3d 610

CITY AND COUNTY OF SAN FRANCISCO, et al., Plaintiffs,

v.PURDUE PHARMA L.P., et al., Defendants.

Case No. 3:18-cv-07591-CRB

United States District Court, N.D. California.

Signed September 30, 2020

Alyssa M. Williams, David S. Casey, Jr., Gayle M. Blatt, Patricia Camille Guerra, James M. Davis, Casey Gerry Schenk Francavilla Blatt and Penfield LLP, Carissa Jasmine Dolan, Thomas Edward Egler, Robbins Geller Rudman and Dowd LLP, Edward D. Chapin, Sanford Heisler Sharp, LLP, San Diego, CA, Dorothy P. Antullis, Pro Hac Vice, Mark J. Dearman, Paul J. Geller, Pro Hac Vice, Mark Dearman, Pro Hac Vice, Robbins Geller Rudman Dowd LLP, Boca Raton, FL, Elizabeth J. Cabraser, Elizabeth Joan Cabraser, Kevin R. Budner, Michael Ian Levin-Gesundheit, Paulina do Amaral, Richard Martin Heimann, Lieff Cabraser Heimann & Bernstein LLP, Jennie Lee Anderson, Audrey Claire Siegel, Paul Laprairie, Andrus Anderson LLP, Louise Hornbeck Renne, Renne Public Law Group, Matthew Seth Melamed, Aelish Marie Baig, Robbins Geller Rudman & Dowd LLP, Owen J. Clements, Jaime Marie Huling Delaye, Sara Jennifer Eisenberg, San Francisco City Attorney's Office Chief of Strategic Advocacy, Yvonne Rosil Mere, Dennis J. Herrera, City Attorney for the City and County of San Francisco, San Francisco, CA, Melinda Davis Nokes, Weitz & Luxenberg, P.C., Los Angeles, CA, Andrew Miller, Pro Hac Vice, Sanford Heisler Sharp, LLP, Washington, DC, Hadiya Khan Deshmukh, Robbins Geller Rudman & Dowd LLP, San Francisco, CA, Michael P. Piggins, Pro Hac Vice, Paul F. Novak, Pro Hac Vice, Tiffany Rose Ellis, Pro Hac Vice, Weitz & Luxenberg, P.C., Detroit, MI, for Plaintiff City and County of San Francisco.

Dorothy P. Antullis, Pro Hac Vice, Paul J. Geller, Pro Hac Vice, Mark Dearman, Pro Hac Vice, Robbins Geller Rudman Dowd LLP, Boca Raton, FL, James M. Davis, Patricia Camille Guerra, David S. Casey, Jr., Casey Gerry Schenk Francavilla Blatt & Penfield, LLP, Edward D. Chapin, Sanford Heisler Sharp, LLP, Nicole R. Trama, Department of Justice Office of the Attorney General, San Diego, CA, Aelish Marie Baig, Robbins Geller Rudman & Dowd LLP, Elizabeth Joan Cabraser, Kevin R. Budner, Michael Ian Levin-Gesundheit, Paulina do Amaral, Richard Martin Heimann, Lieff Cabraser Heimann & Bernstein, LLP, Dennis J. Herrera, City Attorney for the City and County of San Francisco, San Francisco, CA, Hadiya Khan Deshmukh, Robbins Geller Rudman & Dowd LLP, San Francisco, CA, Michael P. Piggins, Pro Hac Vice, Paul F. Novak, Pro Hac Vice, Tiffany Rose Ellis, Pro Hac Vice, Weitz & Luxenberg, P.C., Detroit, MI, for Plaintiff The People of the State of California.

ORDERING GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTIONS TO DISMISS THE FIRST AMENDED COMPLAINT

CHARLES R. BREYER, United States District Judge

The City and County of San Francisco ("San Francisco") and the People of the State of California (collectively, "the City"), acting by and through San Francisco City Attorney Dennis Herrera, have brought a lawsuit intended to address the impact of the opioid epidemic in San Francisco. The lawsuit targets two distinct sets of defendants, "Marketing Defendants"¹ and "Distributor Defendants"² (collectively, "Defendants").³ See infra App. A. The City alleges that: (1) "RICO Marketing Defendants"⁴ violated RICO by forming an illegal Opioid Marketing Enterprise and defrauding San Francisco; (2) "RICO Supply Chain Defendants"⁵ also violated RICO by forming an illegal Opioid Supply Chain Enterprise and defrauding San Francisco; (3) all Defendants contributed to the creation of a public nuisance, i.e., the opioid epidemic, in violation of California Civil Code §§ 3479 – 3480 ; (4) all Defendants, except Walgreens, violated California's Unfair Competition Law ("UCL"); and (5) Marketing Defendants engaged in acts that violated California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code § 17500 et seq.

Five categories of Defendants—all Defendants,⁶ Manufacturers,⁷ Distributors,⁸ Walgreens,⁹ and Anda, Inc.—move to dismiss the City's First Amended Complaint ("FAC") for failure to state a claim. Foreign Defendants also move to dismiss for lack of personal jurisdiction and insufficient service of process, with Endo Int'l and MNK plc also moving to dismiss for insufficient process. The Court hereby GRANTS Defendants’ motion to dismiss the City's RICO claims and DENIES all other bases for dismissal.

I. BACKGROUND

The opioid crisis has infiltrated communities throughout the country. Between 1999 and 2016, more than 350,000 people died from opioid-related overdoses—2017, alone, added nearly 48,000 people to the total number of opioid-related deaths. FAC (dkt. 128) ¶¶ 3–4. San Francisco has been particularly impacted. From 2006 through 2016, the number of people who inject drugs in San Francisco has jumped from 10,000 to over 25,000 persons. Id. ¶ 52. In 2018, San Francisco paramedics administered naloxone¹⁰ to 1,647 people, which was nearly double the amount administered in 2016. Id. ¶ 55 (citing Brian Rinker, Drug Users, Equipped With Naloxone, Are Helping to Reverse Overdoses in San Francisco, ABC News (June 14, 2019), available at https://abcnews.go.com/Health/drug-users-equippednaloxone-helping-reverse-overdoses-san/story?id=63696298). Hospitalizations and overdose deaths have also increased substantially since 2014. Id. ¶ 54 (citing Dr. Phillip O. Coffin, et al., Substance Use Trends in San Francisco Through 2018 at 9 (December 2019), available at https://ndews.umd.edu/sites/ndews.umd.edu/files/San-Francisco-Substance-Use-2019-Annual-Report-Trends-Through-2018.pdf). Not only has the opioid crisis impacted San Francisco's streets, but San Francisco's jails are seeing an influx of opioid contraband. See id. ¶ 57. The San Francisco Sheriff's Department purchased mail screening equipment to combat the massive influx of fentanyl. Id. Even though San Francisco budgeted $23.2 million to address the opioid crisis, the opioid epidemic persists. See id. ¶ 58 (citing City & County of San Francisco, California Mayor's 2017–2018 & 2018–2019 Proposed Budget, Mayor's Office of Public Policy and Finance at 15 (June 1, 2017), available at https://sfmayor.org/sites/default/files/CSF_Budget_Book_2017_Final_CMYK_LowRes.pdf).

As a result of the epidemic, over 2,700 lawsuits, including this one, were filed against opioid manufacturers, distributors, and dispensers. These actions were transferred to Judge Dan A. Polster in the U.S. District Court for the Northern District of Ohio. In February 2020, Judge Polster remanded this action back to the Northern District of California to proceed as a bellwether trial. One month later, the City filed its FAC.

The City alleges that Defendants are responsible for two primary causes of the opioid crisis in San Francisco. First, Marketing Defendants used false and deceptive advertising techniques in a marketing scheme designed to increase the demand and sale of prescription opioids. Id. ¶¶ 7–11. These defendants allegedly created and used a marketing enterprise that targeted physicians, patients, lawmakers, and enforcement agencies, in a systematic effort to change prescriber habits and public perception regarding prescription opioids. Id. ¶¶ 225–546. Second, Defendants manufactured, distributed, and dispensed greater quantities of opioids than they knew would be necessary for legitimate medical uses, failed to design and implement effective controls over the distribution of opioids, and failed to report and take steps to halt suspicious orders that were being diverted into illegal secondary markets. Id. ¶¶ 7, 12. In doing so, Defendants allegedly violated their legal obligations under the Controlled Substances Act ("CSA"), California law, and common law. Id. ¶¶ 579–83. Despite this conduct, Defendants publicly represented that they complied with their legal obligations. Id. ¶¶ 668–80. These factual allegations form the underlying basis for the City's claims.

Now pending are nine motions to dismiss and one request for judicial notice.

II. DISCUSSION

A. The MDL court's decisions are not binding "law of the case."

As a preliminary matter, Defendants argue that this Court should not adopt the MDL's rulings in other cases as the law of this case. Law of the case doctrine is a discretionary practice whereby courts do not redecide issues resolved by the transferee court. 15 Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 3867 (4th ed. Apr. 2020 Update). The MDL court has ruled on several pre-trial motions that applied to all cases consolidated before the MDL; however, the MDL court never ruled on a motion to dismiss involving the present case. See, e.g., In re Nat'l Prescription Opiate Litig., No. 1:17-MD-2804, 477 F.Supp.3d 613, 624–25 (N.D. Ohio Aug. 6, 2020) (denying motions to dismiss Lake and Trumbull counties’ claims against pharmacy defendants). Defendants argue that the doctrine is inapplicable here because it applies only to rulings in the same case, and thus, the prior MDL rulings on motions to dismiss should not prevent this Court from independently reviewing each of Defendants’ arguments in this case. Def. Mot. (dkt. 169) at 5. The City warns that this would result in "piecemeal decision making that MDL centralization is intended to avoid." Opp. (dkt. 208) at 7 (quoting 15 Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 3867 (4th ed. Aug. 2019 Update) ). But even the City acknowledges that the MDL's decisions are not binding—just, given the similarities, highly persuasive. Id. at 8. This Court agrees: the MDL's rulings will serve as a "springboard." This Court will independently review Defendants’ arguments, but will rely on the MDL's rulings as highly persuasive authority to the extent that these decisions are consistent with California and Ninth Circuit authority.

The City relies excessively on this Court's statement that it will "not review or alter any of the rulings [that] have already been entered in the MDL...