In re Lidoderm Antitrust Litig.

• Decision Date: 05 May 2015
• Docket Number: Case No. 14–md–02521–WHO
• Citation: 103 F.Supp.3d 1155
• Parties: In re Lidoderm Antitrust Litigation
• Court: U.S. District Court — Northern District of California

103 F.Supp.3d 1155

In re Lidoderm Antitrust Litigation

Case No. 14–md–02521–WHO

United States District Court, N.D. California.

Signed May 5, 2015

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS SECOND AMENDED COMPLAINTS

Re: Dkt. No. 139

WILLIAM H. ORRICK, United States District Judge

INTRODUCTION

This case concerns the alleged antitrust and anticompetitive impact of a July 2012 settlement agreement between defendants Endo Pharmaceuticals Inc., Teikoku Seiyaku Co., Teikoku Pharma USA (collectively “Endo defendants”) and defendant Watson Pharmaceuticals, Inc. (collectively “defendants”), which terminated Watson's patent litigation lawsuit against the Endo defendants in exchange for the provision of brand-name Lidodermpatches to Watson and giving Watson a period of exclusivity to market its generic version of Lidodermpatches without competition from the Endo defendants' generic patch.¹Following my prior Order granting in part and denying in part the defendants' motion to dismiss, the End–Payor Plaintiffs (EPPs) and the Government Employees Health Organization (GEHA) filed Second Amended Complaints (SACs) on December 19, 2014. Dkt Nos. 22, 23.²Defendants move to dismiss specific state law antitrust, consumer protection, and unjust enrichment claims.³

Each state's statutes and case law, to the extent the latter exists, must be analyzed independently to determine the merits of the motion—it is not helpful, for example, to look to cases in Michigan to determine the reach of the consumer protection statute in Maine. Following oral argument on the motion, and having analyzed the pleadings requirements under each of the state law claims at issue, I GRANT in part and DENY in part the motion to dismiss.

LEGAL STANDARD

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6)where the pleadings fail to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). A complaint may be dismissed if it does not allege “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 claim has facial plausibility when the pleaded factual content 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). However, “a complaint [does not] suffice if it tenders naked assertions devoid of further factual enhancement.” Id.(quotation marks and brackets omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id.If a motion to dismiss is granted, a court should normally grant leave to amend unless it determines that the pleading could not possibly be cured by allegations of other facts. Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir.1990).

DISCUSSION

I. END–PAYOR SECOND AMENDED COMPLAINT

Defendants move only to dismiss the EPPs' claims asserted under Massachusetts and Utah laws. In opposition, the EPPs agree to dismiss their claim under Utah law, asking that the dismissal be without prejudice to amending to bring in a Utah resident as a class representative in the future. EPP Oppo. [Dkt. No. 143] at 1. The EPPs' claim under Utah law is DISMISSED WITHOUT PREJUDICE.

With respect to the EPPs' claim under Massachusetts law, the question is whether End–Payor plaintiff Letizia Galloto, who is bringing her claim under Section 9 of the Massachusetts Consumer Protection Act (CPA), was required to provide pre-suit notice to defendants prior to bringing her claim. Mass. Gen. Law ch.93A § 9. Plaintiff Galloto is a resident of Massachusetts who pleads that she indirectly purchased Lidodermand/or the generic version at supracompetitive prices during the Class Period. EPP SAC, ¶ 17. In their Opposition, the EPPs argue that Galloto does not need to comply with the pre-suit notice requirement because none of the defendants maintain a place of business or keep assets in Massachusetts. EPP Oppo. at 2; CPA, § 9(3).

Defendants counter that in order to avoid the pre-suit notice requirement, a plaintiff must plead that defendants do not maintain a place of business or keep assets in Massachusetts and the EPP SAC is devoid of those allegations. See Bean v. Bank of New York Mellon,No. CIV.A. 12–10930–JCB, 2012 WL 4103913, at *7 (D.Mass. Sept. 18, 2012)(“Although Bean is not required to allege the legal conclusion that the demand letter requirement is inapplicable, she must allege facts that BNY does not maintain a place of business or keep assets in Massachusetts to show the exception to the demand letter requirement applies to plead a Chapter 93A claim.”); Sumner v. Mortgage Elec. Registration Sys., Inc., No. CIV.A. 11–11910–DJC, 2012 WL 3059429, at *6 (D.Mass. July 26, 2012).

Because the EPP SAC does not allege that none of the defendants maintain a place or business or have assets in Massachusetts—which would excuse the pre-suit demand requirement—defendants' motion to dismiss the EPPs' claim under Massachusetts law is GRANTED with leave to amend. The Third Amended Complaint shall be filed within 35 days of the date of this Order.⁴

II. GEHA'S SECOND AMENDED COMPLAINT

Defendants challenge GEHA's state law antitrust, consumer protection, and unjust enrichment claims for various states.

A. State Law Antitrust and Consumer Protection Claims⁵

1. Rhode Island

In dismissing the EPPs' antitrust and monopolization claims under Rhode Island law, I concluded that the Illinois Brickrepealer statute passed by Rhode Island in July 2013 was not retroactive and therefore that the EPPs' claims, including claims for injuries occurring after July 2013, were barred. Dkt. No. 117 at 45. GEHA challenges that conclusion and contends, at a minimum, that injuries resulting from purchases of Lidodermafter July 2013 should be actionable. GEHA Oppo. [Dkt. No. 146] at 4–5. GEHA argues that in cases where there is a continuing conspiracy to violate the federal antitrust laws, “this has usually been understood to mean that each time a plaintiff is injured by an act of the defendants a cause of action accrues to him to recover the damages caused by that act and that, as to those damages, the statute of limitations runs from the commission of the act.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 338, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971). That, plus the fact that Rhode Island's antitrust statute prohibits “a construction of the Antitrust Act that is not in harmony with federal antitrust law,” Siena v. Microsoft Corp., 796 A.2d 461, 464 (R.I.2002), means, according to GEHA, that it should be able to pursue injuries suffered after July 2013, even though the antitrust conduct at issue was effectuated by the 2012 agreement.

The issue here is not a statute of limitations defense or a continuing conspiracy to commit antitrust conduct between the defendants. It is whether injury that occurred afterRhode Island passed legislation allowing indirect purchaser actions is barred because the only alleged antitrust conduct—the May 2012 agreement—occurred well before the repealer statute was passed. In effect, GEHA is attempting to overcome my prior conclusion that Rhode Island's repealer statute is not retroactive. I conclude, as before, that because the antitrust conduct identified by GEHA occurred before the Rhode Island legislature passed the law allowing for indirect purchaser actions, GEHA's claims under Rhode Island's antitrust law are barred. See, e.g.,Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC,737 F.Supp.2d 380, 430 (E.D.Pa.2010)(looking to date of alleged antitrust conduct and not date of damage to determine whether claims were barred because conduct occurred before repealer statute passed); see alsoIn re Relafen Antitrust Litig.,225 F.R.D. 14, 26 (D.Mass.2004)(focusing on alleged date of antitrust conduct, not date of resulting injury, where repealer statutes were prospective in application).⁶GEHA's claim under Rhode Island's antitrust statute is DISMISSED WITH PREJUDICE.

2. Alaska

Defendants move to dismiss GEHA's claim under the Alaska consumer protection statute, arguing that it is barred by Illinois Brick. They note that Alaska's antitrust statute was amended in 2003 to clarify that only the Alaska Attorney General may seek monetary relief on behalf of indirect purchasers. Alaska Stat. Ann. § 45.50.577(i)(“Only the attorney general, in a suit brought under this section, may seek monetary relief for injury indirectly sustained for a violation.”). They point out that no court has construed Alaska's consumer protection statute (Alaska Stat. Ann. § 45.50.531(a)) to permit claims based on alleged antitrust and monopolization conduct by indirect purchasers. And a judge in this District has addressed this exact question and rejected the plaintiffs' attempt to circumvent the Illinois Brickbar by reliance on the more general Alaska Consumer Protection statute. See In re Dynamic Random Access Memory (Dram) Antitrust Litig., 516 F.Supp.2d 1072, 1108 (N.D.Cal.2007)(“recognizing that this court is not in the best position to decide unresolved legal issues for the state of Alaska, the court chooses to adopt the interpretation that will wreak the least amount of havoc on the existing law in Alaska. To that end, the court therefore declines to read the AUTPCPA to permit indirect purchaser standing, since no court has affirmatively found to the contrary, and since, under the current status of the law in Alaska, only the attorney general may sue for money damages on behalf of indirect purchasers as a result of antitrust violations.”).

In opposition, GEHA relies only on the broad language of the Alaska consumer protection statute and on Fed. Trade Comm'n v. Mylan Labs., Inc., 99 F.Supp.2d 1, 5 (D.D.C.1999). In Mylan,the court simply allowed the Alaska Attorney General to seek restitution on behalf of indirect...