Cnty. of Monroe v. Purdue Pharma L.P. (In re Nat'l Prescription Opiate Litig.)

Decision Date30 April 2020
Docket Number Case No. 1:18-op-5158,MDL 2804,Case No. 1:17-md-2804
Citation458 F.Supp.3d 665
Parties IN RE: NATIONAL PRESCRIPTION OPIATE LITIGATION This Document Relates to: County of Monroe, Michigan v. Purdue Pharma L.P., et al.
CourtU.S. District Court — Northern District of Ohio

Attorney not added: Litigation Case

OPINION AND ORDER REGARDING DEFENDANTSMOTIONS TO DISMISS

DAN AARON POLSTER, UNITED STATES DISTRICT JUDGE

Before the Court are three separate motions to dismiss the Complaint (Doc. #: 3032) filed by plaintiff Monroe County, Michigan.1 Distributors,2 Pharmacies,3 and Manufacturers4 each filed a group motion, seeking dismissal of Monroe's claims against them.5 Doc. #: 572 (Distributors); Doc. #: 592 (Pharmacies); Doc. #: 595 (Manufacturers). Monroe filed an omnibus opposition that addressed all three motions. Doc. #: 729. The three Defendant groups each filed replies in support of their respective motions. Doc. #: 820 (Distributors); Doc. #: 815 (Pharmacies); Doc. #: 821 (Manufacturers).

The Court has reviewed all of the parties’ submissions. For the reasons stated below, the Court now rules as follows:

DefendantsMotions to Dismiss are GRANTED with respect to Count III (MCPA) and Count V (Negligence).
• In addition, the Manufacturers’ Motion to Dismiss is GRANTED with respect to Count VI (Unjust Enrichment), Count VII (Fraud and Fraudulent Concealment), and Count VIII (Civil Conspiracy), to the extent those claims: (1) seek recovery for monetary losses, and (2) are based on fraudulent marketing of prescription opioids that are not "combination products."
• The motions are otherwise DENIED .
I. 12(b)(6) Legal Standard.

The Court incorporates by reference the applicable legal standards set forth in its Opinion and Order in West Boca Medical Center, Inc. v. AmerisourceBergen Drug Corp., Case No. 1:18-op-45530, MDL Doc. #: 3253 at 2-3.

II. Factual Allegations.

In its Complaint, Monroe asserts the following claims:

Count I, Violation of RICO,6 18 U.S.C. § 1961 et seq.Opioid Marketing Enterprise (Against RICO Marketing Defendants);7
Count II, Violation of RICO, 18 U.S.C. § 1961 et seq.Opioid Supply Chain Enterprise (Against RICO Supply Chain Defendants);
• Count III, Violation of the Michigan Consumer Protection Act ("MCPA"), MCL § 445.901, et seq. (Against All Defendants);
• Count IV, Public Nuisance (Against All Defendants);
• Count V, Negligence (Against All Defendants);
• Count VI, Unjust Enrichment (Against All Defendants);
• Count VII, Fraud and Fraudulent Concealment (Against All Defendants);
• Count VIII, Civil Conspiracy (Against All Defendants);

Most of Monroe's allegations of Defendants’ conduct are similar to those alleged in the complaints filed in the following actions: (i) Summit County (Doc. #: 513); (ii) Muscogee Nation (Doc. #: 731); (iii) Blackfeet Tribe (Doc. #: 6);8 (iv) Cleveland Bakers (Doc. #: 3031); (v) West Boca (Doc. #: 2985); and (vi) Broward County (Doc. #: 525).9 The Magistrate Judge and this Court have addressed those factual allegations at length. See Summit County Report and Recommendation ("R&R") (Doc. #: 1025); Summit County Opinion and Order (Doc. #: 1203); Muscogee Nation R&R (Doc. #: 1499); Blackfeet Tribe R&R (Doc. #: 1500); Muscogee Nation and Blackfeet Tribe Opinion and Order (Doc. #: 1680); Cleveland Bakers Opinion and Order (Doc. #: 3177); West Boca Opinion and Order (Doc. #: 3253); Broward County Opinion and Order (Doc. #: 3274). Thus, the Court provides below only a brief overview of the factual allegations specific to Monroe County, and incorporates by reference the general factual circumstances surrounding the opioid crisis and the allegations of Defendants’ behavior that are common to all of these cases.

A. Factual Allegations Against Defendants.

Monroe alleges the Manufacturer Defendants, also referred to as "Marketing Defendants," manufacture, sell, and market prescription opioids. Monroe asserts the Marketing Defendants fueled the opioid crisis "through a massive marketing campaign premised on false and incomplete information," which "engineered a dramatic shift in how and when opioids are prescribed by the medical community and used by patients." Doc. #: 3032, ¶ 10. Monroe alleges the Marketing Defendants dramatically increased sales of prescription opioids, despite their knowledge "that opioids were addictive and subject to abuse, and that their other claims regarding the risks, benefits, and superiority of opioids for long-term use were untrue and unfounded." Id. , ¶ 11. Monroe alleges Defendants reaped billions of dollars of profit as a result of opioid sales. Id. , ¶¶ 12-13.

Further, Monroe alleges all Defendants "failed to maintain effective controls over the distribution of prescription opioids" and instead "actively sought to evade such controls." Doc. #: 3032, ¶ 14. Monroe asserts Defendants fueled and sustained the opioid crisis by "selling and distributing far greater quantities of prescription opioids than they knew could be necessary for legitimate medical uses," while failing to report and take steps to halt suspicious orders, "thereby exacerbating the oversupply of such drugs and fueling an illegal secondary market." Id. , ¶¶ 14, 641, 648-650.

B. Facts Specific to Monroe County, Michigan.

In its Complaint, Monroe alleges the following facts: Monroe County "sits squarely in the crosshairs" of the opioid-fueled epidemic. Doc. #: 3032, ¶ 656. Over the course of extended periods of time, Monroe had opioid prescription rates far exceeding its population, which provided notice to Defendants that diversion was likely occurring in the County. Doc. #: 3032, ¶¶ 635-636. For instance, according to Automation of Reports and Consolidated Orders System ("ARCOS") data disclosed to date, from 2006 to 2014, approximately 71 million units of various opioids were shipped into Monroe County – amounting to approximately 53 pills for every man, woman, and child in the County each year. Id. , ¶ 639. Although Monroe's population was only about 150,000 people, in 2016, patients in the County received 154,426 opioid prescriptions, amounting to 10,935,495 units of opiates. Id. , ¶ 657. These figures indicate a far greater distribution of opioids than could be justified by legitimate medical needs. Id. , ¶ 641.

This oversupply of opioids and increased opioid use has had "severe and far-reaching public health, social services, and criminal justice consequences in the County, including the "fueling of addiction, overdose, and death from illicit drugs." Id. , ¶ 19. From 2013 to 2016, the number of opioid-related deaths in the County skyrocketed from 485 to 817 per year, i.e. over 32 deaths for every 100,000 residents. Id. , ¶ 657.

The necessary and extraordinary costs of responding to these consequences are borne by Monroe County and other governmental entities. Id. , ¶¶ 19-20. These costs include "the handling of emergency responses to overdoses, providing addiction treatment, handling opioid-related investigations, arrests, adjudications, treating opioid-addicted newborns in neonatal intensive care units, and burying the dead." Id. , ¶ 19. More specifically, the opioid crisis caused by Defendants’ conduct has forced the County to make large, unplanned-for expenditures in order to protect the health and welfare of its community, "costing millions [in] treatment services, emergency visits, medical care, treatment for related illnesses and accidents, lost productivity to Monroe County's workforce, increased law enforcement and judicial expenditures, increased prison and public works expenditures, increased substance abuse treatment and diversion plan expenditures, lost economic activity, and lost reputation and good will." Id. , ¶ 858.

III. Legal Issues Relevant to Multiple Claims.
A. Authority to Sue.

The Pharmacies and Manufacturers assert Monroe lacks standing to bring its claims. The Pharmacies base their arguments on Article III of the United States Constitution, while the Manufacturers rely on the Michigan Constitution. The Court rejects these arguments and denies both motions to dismiss as they relate to standing.

1. Article III Standing.

The Pharmacies assert Monroe lacks Article III standing to assert its claims in this case. See Doc. #: 592-1 at 2 (incorporating by reference the same arguments made in Summit County). The Court rejects this argument for the reasons stated in Summit County , i.e. because Monroe has plausibly pleaded an injury-in-fact that is fairly traceable to the Defendants’ alleged actions and is likely to be redressed by the requested relief. Doc. #: 1025 at 100-102, adopted by Doc #: 1203 at 2 n.2. Accordingly, the Court denies the Pharmacy Defendantsmotion to dismiss on this ground.

2. Authority to Sue Under Michigan Law – The Statewide Concern Doctrine.

The Manufacturers contend that, under Michigan law, the power of a county to sue is limited to actions concerning "local interests" and, because this lawsuit involves a "statewide interest," it infringes on the Attorney General's power to sue on behalf of the State of Michigan. Doc. #: 595-1 at 3-5.

Michigan law provides each county with the power to sue and be sued. MCL § 45.3. The statutory provision granting this power is to be "liberally construed" in favor of the counties. Mich. Cons. 1963, art. 7, § 34. At the same time, the Michigan Attorney General has broad discretion to determine what constitutes a "state interest," and also has broad authority to bring actions and settle claims on behalf of the state and its people. In re Certified Question from U.S. Dist. Ct. for E.D. Mich. , 465 Mich. 537, 638 N.W.2d 409, 413-14 (2002).

Arguing the opioid crisis is a statewide (indeed, national) concern, the Manufacturers contend Monroe's claims necessarily seek to vindicate the state's interest, thereby infringing on the Attorney General's exclusive powers. Doc. #: 595-1 at 4. But the Manufacturers are mistaken in at least two respects. First, Monroe clearly seeks recovery for its own harms, and not on...

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