Ironworkers Local Union v. Astrazeneca Pharm., Case No. 6:07-cv-5000-0r1-22DAB.

• Decision Date: 04 November 2008
• Docket Number: Case No. 6:07-cv-5000-0r1-22DAB.
• Citation: 585 F.Supp.2d 1339
• Parties: IRONWORKERS LOCAL UNION NO. 68 & Participating Employers Health & Welfare Funds, et al., Plaintiffs, v. ASTRAZENECA PHARMACEUTCALS LP, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

Page 1339

585 F.Supp.2d 1339

IRONWORKERS LOCAL UNION NO. 68 & Participating Employers Health & Welfare Funds, et al., Plaintiffs, v. ASTRAZENECA PHARMACEUTCALS LP, et al., Defendants.

Case No. 6:07-cv-5000-0r1-22DAB.

United States District Court, M.D. Florida, Orlando Division.

November 4, 2008.

COPYRIGHT MATERIAL OMITTED

Brian J. McCormick, James J. Pepper, Stephen A. Sheller, Sheller, PC, William R. Kane, Cafferty Faucher, LLP, Steven F. Marino, Marino & Conroy, Philadelphia, PA, Halley Ascher, Richard Volin, Rosalee B. Connell, Finklestein Thompson, LLP, Washington, DC, Harry R. Blackburn, Michael J. Acosta, Harry R. Blackburn & Associates, PC, Medford, NJ, Patrick E. Cafferty, Cafferty Faucher, LLP, Ann Arbor, MI, Benjamin F. Johns, Denise Davis Schwartzman, Joseph G. Sauder, Chimicles & Tikellis, LLP, Haverford, PA, Casandra A. Murphy, Joseph H. Meltzer, Terence S. Ziegler, Schiffrin Barroway Topaz Kessler, LLP, Radnor, PA, Robert K. Jenner, Janet, Jenner & Suggs, LLC, Baltimore, MD, Brian P. Kenney, Emily C. Lambert, Erie L. Young, Meredith T. Deming, Kenney Egan McCafferty & Young, Plymouth Meeting, PA, for Plaintiffs.

Brian W. Shaffer, Gordon J. Cooney Jr., John F. Schultz, Kristofor T. Hennings, Morgan, Lewis & Bockius, LLP, Shane T. Prince, Dechert, LLP, Philadelphia, PA, Robert A. White, Morgan, Lewis & Brockius, LLP, Princeton, NJ, Chris S. Coutroulis, Carlton Fields, PA, Tampa, FL, Amber Anderson Villa, Kurt S. Kusiak, Peter E. Ball, William G. Cosmas Jr., Sally & Fitch, LLP, Boston, MA, for Defendants.

ORDER

ANNE C. CONWAY, District Judge.

This cause comes before the Court for consideration of Defendant AstraZeneca's Motion to Dismiss (Doc. 19) and Defendant Parexel's Motion to Dismiss (Doc. 18). Plaintiffs filed a consolidated response to both. motions (Doc. 28),¹ and Defendant AstraZeneca subsequently filed a reply (Doc. 33). Upon careful consideration of the motions and memoranda, the Court determines that both motions are due to be GRANTED.

I. BACKGROUND

In this putative class action, various union health and welfare benefit funds² and an individual consumer seek redress for economic injuries they say they sustained as a result of a "nationwide, uniform marketing campaign involving fraudulent misstatements and deceptive conduct in the promotion of Seroquel," an atypical antipsychotic drug manufactured by Defendant AstraZeneca. Doc. 17 at 4. According to Plaintiffs, this alleged scheme was devised and carried out by Defendant AstraZeneca in alliance with Defendant Parexel, a medical marketing firm employed by AstraZeneca in 2001 to provide "publications planning, meetings support, branding strategy, marketing solutions and advocacy programs relating to Seroquel." Id. at 46.

Plaintiffs allege that the AstraZeneca/Parexel alliance both "misrepresented the comparative safety, efficacy and superiority of Seroquel over other traditional/typical or atypical antipsychotics," Id. at 4, and "illegally marketed and promoted Seroquel for unapproved or `off-label' uses," Id. at 3. This scheme was allegedly accomplished through the following mechanisms: concealment of unfavorable results of clinical trials; aggressive promotion of the drug as safe and effective for uses not approved by the FDA; substantial contributions to non-profit mental health organizations sponsorship of peer-selling events at which physicians were given financial incentives both to attend the event and to speak favorably about Seroquel to their peers; employment of "ghost-writers" to author seemingly-independent medical publications touting the superior safety and effectiveness of Seroquel; and distribution of marketing and promotional materials directly to physicians which concealed or misrepresented facts about the drug's safety and effectiveness.

As a result of Defendants' conduct, Plaintiffs claim that they were duped into paying hundreds of millions of dollars for Seroquel both to treat conditions for which the drug was not approved and where less expensive, and equally safe and effective, alternative treatments existed. Meanwhile, according to Plaintiffs, Defendant AstraZeneca saw a marked increase in demand for Seroquel; the company raked in over $4.6 billion in sales of the drag in 2007 alone. Id. at 57. Plaintiffs maintain that had they known of Defendants' fraudulent scheme, they would have taken steps to minimize the number of doses of Seroquel they purchased by, among other things, excluding Seroquel from approved schedules or actively dissuading doctors from prescribing Seroquel to their patients. Id. at 59.

Plaintiffs have filed a consolidated complaint (Doc. 17) asserting claims under the federal Racketeer Influenced and Corrupt Organizations ("RICO") statute and state consumer protection laws as well as common law claims for fraud, misrepresentation, civil conspiracy and unjust enrichment. Defendants now seek to dismiss the complaint in its entirety for failure to state a claim.

II. LEGAL STANDARD

In deciding a motion to dismiss, the court must accept as true all the factual allegations in the complaint, drawing all inferences derived from those facts in the light most favorable to the plaintiff. Brown v. Crawford County, 960 F.2d 1002, 1010 (11th Cir.1992). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) overruled on other grounds by Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984); Little v. N. Miami, 805 F.2d 962, 965 (11th Cir.1986), However, a plaintiff must supply more than just any conceivable set of facts tending to support a claim, but "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1974, 167 L.Ed.2d 929 (2007).

III. DISCUSSION

A. Counts I and II: Civil RICO Claims

In Counts I and II of the consolidated complaint, Plaintiffs seek to recover damages by way of the civil remedies provision of the federal RICO statute.³ In general, the federal RICO statute prohibits any person from participating in a pattern of racketeering activity or from collecting an unlawful debt. See generally 18 U.S.C. § 1962. A pattern of racketeering activity is defined to encompass a wide range of acts which are indictable as crimes involving fraud, bribery, theft, embezzlement or extortion. See 18 U.S.C. § 1961(1). In this case, Plaintiffs allege that Defendants' pattern of racketeering activity involved acts that are indictable under 18 U.S.C. §§ 1341 and 1343, relating to mail and wire fraud.

The civil remedies provision of the federal RICO statute provides that "[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney's fee." 18 U.S.C. § 1964(c). Thus, the essential elements of a civil RICO claim are: (1) a violation of section 1962; (2) injury to business or property; and (3) a causal connection between the violation and the injury. Avirgan v. Hull, 932 F.2d 1572, 1577 (11th Cir.1991). It is the third element on which Defendants primarily focus their motions to dismiss.

Defendants present two main arguments with regard to causation. First, Defendants maintain that Plaintiffs have failed to demonstrate any detrimental reliance on the alleged misstatements made by Defendants in furtherance of their scheme to defraud. Second, Defendants assert that even if Plaintiffs have shown detrimental reliance, they still cannot establish the requisite causal connection between Defendants' RICO violation and Plaintiffs' injuries.

The most recent United States Supreme Court authority on pleading and proving detrimental reliance in relation to a civil RICO claim is Bridge v. Phoenix Bond & Indem. Co., ___ U.S. ___, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008), where the Court confronted the issue of whether first-party reliance was required to sustain a RICO claim predicated on mail fraud. In holding that it was not, the Court opined that first-party reliance was neither a required element of a civil RICO claim nor a prerequisite to establishing proximate cause. Id. at 2143-44. Even so, Defendants argue that Bridge did not entirely do away with RICO's reliance requirement and urge that Plaintiffs must at least allege that someone relied on Defendants' alleged misrepresentations. While, the Court does not read Bridge to absolutely require proof or allegation of detrimental reliance in order to sustain a RICO claim predicated on mail or wire fraud, the Court recognizes, as the Bridge Court did, that "the complete absence of reliance may prevent the plaintiff from establishing proximate cause." Id. at 2144. Nonetheless, it is clear from the complaint that Plaintiffs in this case have alleged third-party reliance by prescribing physicians.⁴ See, e.g., Doc. 17 at 21 ("[P]hysicians, relying upon and influenced by the misleading and incorrect information provided by AstraZeneca about Seroquel, wrote off-label prescriptions for Seroquel for use by their patients."). Whether this alleged third-party reliance is sufficient to establish proximate cause is another issue, one to which the Court now turns.

As was established by the United States Supreme Court in Holmes v. Sec. Investor Prot. Corp., 503 U.S. 258, 112 S.Ct. 1311, 117 L.Ed.2d 532 (1992), civil RICO claims must be supported by a showing that the alleged injury was proximately caused by the alleged unlawful act, Id. at 269, 112 S.Ct. 1311. The Supreme Court used the term proximate cause "to label generically the judicial tools used to limit a person's responsibility for the consequences of that person's own acts." Id. at 268, 112 S.Ct. 1311. In this regard, the Court intimated that the term...