State v. Purdue Pharma L.P.
| Decision Date | 16 August 2019 |
| Docket Number | C.A. No. PC-2018-4555 |
| Parties | STATE OF RHODE ISLAND, by and through, PETER NERONHA, Attorney General, Plaintiff, v. PURDUE PHARMA L.P.; PURDUE PHARMA INC.; THE PURDUE FREDERICK COMPANY, INC.; RHODES PHARMACEUTICALS L.P.; RHODES TECHNOLOGIES; RHODES TECHNOLOGIES INC.; RICHARD S. SACKLER; INSYS THERAPEUTICS, INC.; JOHN N. KAPOOR; TEVA PHARMACEUTICALS USA, INC.; CEPHALON, INC.; MALLINCKRODT PLC; MALLINCKRODT, LLC; SPECGX, LLC; CARDINAL HEALTH, INC.; MCKESSON CORPORATION d/b/a MCKESSON DRUG COMPANY; and AMERISOURCEBERGEN DRUG CORPORATION, Defendants. |
| Court | Rhode Island Superior Court |
DECISION
Before this Court are motions by Defendants Purdue Pharma L.P.; Purdue Pharma Inc.; The Purdue Frederick Company, Inc. (collectively Purdue or Purdue Defendants);3 RhodesPharmaceuticals L.P.; Rhodes Technologies; Rhodes Technologies Inc. (Rhodes Technologies Inc. with Rhodes Pharmaceuticals L.P. and Rhodes Technologies, Rhodes or Rhodes Defendants); Insys Therapeutics Inc. (Insys); Teva Pharmaceuticals USA, Inc. (Teva); Cephalon, Inc. (Cephalon); Mallinckrodt plc; Mallinckrodt, LLC (Mallinckrodt, LLC with Mallinckrodt plc, Mallinckrodt or Mallinckrodt Defendants); SpecGx, LLC (SpecGx)4 (SpecGx with Purdue Defendants, Rhodes Defendants, Mallinckrodt Defendants, Insys, Teva, Cephalon, Richard S. Sackler (Sackler); and John N. Kapoor (Kapoor) (collectively Manufacturer Defendants, Marketing Defendants, or Manufacturers); Cardinal Health, Inc. (Cardinal); McKesson Corporation d/b/a McKesson Drug Company (McKesson); and AmerisourceBergen Drug Corporation (AmerisourceBergen) (AmerisourceBergen collectively with Cardinal and McKesson, Distributor Defendants or Distributors) (collectively Defendants) to dismiss the Amended Complaint of the State of Rhode Island (Plaintiff or the State). Defendants argue that the State has failed to state a claim upon which relief can be granted under Super. R. Civ. P. 12(b)(6). Sackler, Kapoor,5 and Mallinckrodt plc move to dismiss for lack of personal jurisdiction under Super. R. Civ. P. 12(b)(2). In addition to its 12(b)(6) motion, Rhodes moves to dismiss the claims against it pursuant to Super. R. Civ. P. 8 and 9, and alternately moves for a more definite statement under Super. R. Civ. P. 12(e). The State objects to all Defendants' motions. Jurisdiction is pursuant to G.L. 1956 § 8-2-14.
This matter arises from a public health crisis in Rhode Island, and across the country, brought on by unprecedented levels of addiction, overdose, and death associated with the use and abuse of prescription opioid pharmaceutical products. On June 25, 2018, the State, by and through its Attorney General, filed a Complaint against manufacturers and distributors of pharmaceutical opioids in response to this epidemic. Defendants named in the Complaint included Purdue and Insys, manufacturers of prescription opioids; along with Cardinal, McKesson, and AmerisourceBergen, distributors of opioids. In the Complaint, the State brought counts of public nuisance; violations of the Rhode Island State False Claims Act (the State False Claims Act), G.L. 1956 §§ 9-1.1-1 et seq.; fraud and fraudulent misrepresentation; negligence, negligence per se, gross negligence, and negligent misrepresentation; and unjust enrichment. Plaintiff alleged that these defendants conducted a campaign to unlawfully promote and distribute opioids in Rhode Island and sought to recover for the resulting damages.
On September 28, 2018, the defendants named in the Complaint moved to dismiss. The manufacturers (Purdue Defendants and Insys) argued that the Complaint failed due to (1) federal preemption of all claims; (2) lack of an adequate chain of causation; (3) Rhode Island Supreme Court precedent contrary to the public nuisance claim; (4) failure of the State's fraud allegations due to lack of particularity; (5) lack of a duty required for the negligence claim; and (6) improper pleading of unjust enrichment. In a separate motion to dismiss and supporting memorandum, the distributors (Cardinal, McKesson, and AmerisourceBergen) moved to dismiss arguing that (1) the public nuisance claim should be dismissed because the State fails to plead the requisite public right and control over the instrumentality at the time of injury; (2) the negligence claims should bedismissed for lack of a duty or breach of duty; (3) the unjust enrichment claim should be dismissed; and (4) all claims fail for additional reasons including lack of proximate causation, the derivative injury rule, the free public services doctrine, and the economic loss doctrine. The State objected to these motions to dismiss.
On November 19, 2018, the State filed an Amended Complaint with the same five counts brought in the Complaint. Most significantly, the State joined ten additional defendants including the Rhodes Defendants, the Mallinckrodt Defendants, SpecGx, Teva, Cephalon, Sackler, and Kapoor. Rhodes, Teva, Cephalon, Mallinckrodt, and SpecGx are manufacturers of prescription opioid pharmaceutical products. Sackler is a board member and the former President and Co-Chairman of Purdue. Kapoor is the former Chairman of Insys.
In the Amended Complaint, the State brings Counts IV (Negligence, Negligence Per Se, Gross Negligence, and Negligent Misrepresentation) and V (Unjust Enrichment) against all named Defendants. The State brings the remaining counts against select Defendants, only. The State brings Count I, Public Nuisance, against Purdue Defendants, Rhodes, Sackler, Mallinckrodt, SpecGx, Teva, Cephalon, and Distributor Defendants. The State brings Count II, Violations of the State False Claims Act, against Purdue Defendants, Rhodes, Sackler, Insys, and Kapoor. Lastly, the State brings Count III, Fraud and Fraudulent Misrepresentation, against Purdue Defendants, Rhodes, Insys, Mallinckrodt, SpecGx, Teva, Cephalon, Sackler, and Kapoor.
On January 15, 2019, all Defendants moved to dismiss the Amended Complaint. Manufacturer and Distributor Defendants argue that the State has failed to state a claim upon which relief can be granted pursuant to Super. R. Civ. P. 12(b)(6). Sackler, Kapoor, and Mallinckrodtplc move to dismiss for lack of personal jurisdiction under Super. R. Civ. P. 12(b)(2).6 Rhodes Defendants argue that Plaintiff has failed to state a claim under Super. R. Civ. P. 8 and Super. R. Civ. P. 9, and alternately move for a more definite statement under Super. R. Civ. P. 12(e) if the State's claims against them are not dismissed.
The State objects to all Defendants' motions. This Court heard argument on March 6, 2019; March 7, 2019; and April 25, 2019.7
It is well-settled that the sole function of a motion to dismiss is to test the sufficiency of the complaint. Ryan v. State, Department of Transportation, 420 A.2d 841, 842 (R.I. 1980); Dutson v. Nationwide Mutual Insurance Co., 119 R.I. 801, 803-04, 383 A.2d 597, 599 (1978). "[D]efenses may at the option of the pleader be made by motion [including] (2) [l]ack of jurisdiction over the person; . . . [and] (6) [f]ailure to state a claim upon which relief can be granted." See Super. R. Civ. P. 12(b).
'"When ruling on a Rule 12(b)(6) motion, the trial justice must look no further than the complaint, assume that all allegations in the complaint are true, and resolve any doubts in a plaintiff's favor."' Estate of Sherman v. Almeida, 747 A.2d 470, 473 (R.I. 2000) (quoting Rhode Island Affiliate, American Civil Liberties Union, Inc. v. Bernasconi, 557 A.2d 1232 (R.I. 1989)). "A motion to dismiss under Rule 12(b)(6) will only be granted 'when it is clear beyond a reasonable doubt that the plaintiff would not be entitled to relief from the defendant under any setof facts that could be proven in support of the plaintiff's claim.'" Bruno v. Criterion Holdings, Inc., 736 A.2d 99 (R.I. 1999) (quoting Folan v. State/Department of Children, Youth and Families, 723 A.2d 287, 289 (R.I. 1999)). On the other hand, "[i]n order to withstand a defendant's Rule 12(b)(2) motion to dismiss a complaint for lack of in personam jurisdiction, a plaintiff must allege sufficient facts to make out a prima facie case of jurisdiction." Bendick v. Picillo, 525 A.2d 1310, 1311-12 (R.I. 1987) (citing Ben's Marine Sales v. Sleek Craft Boats, 502 A.2d 808, 809 (R.I. 1985)).
In the Amended Complaint, the State brings five counts, including Count I, Public Nuisance; Count II, Violations of the State False Claims Act; Count III, Fraud and Fraudulent Misrepresentation; Count IV, Negligence, Negligence Per Se, Gross Negligence, and Negligent Misrepresentation; and Count V, Unjust Enrichment, against seventeen Defendants. However, the State does not bring all counts against all Defendants. Therefore, the Defendants have submitted joint memoranda—including a motion by Manufacturer Defendants and another from Distributor Defendants—in support of their motions to dismiss while supplementing the arguments therein with individual memoranda. Accordingly, the Court will address both individual and joint arguments in its analysis and may reference previous sections due to the significant overlap between Defendants' arguments and the State's counts against them.
First, Manufacturer Defendants argue that Plaintiff failed to state a claim upon which relief may be granted because (1) the State does not adequately plead causation, (2) the public nuisance claim fails under Rhode Island law, (3) the State does not support fraud based claims with particularity, (4) the State does not plead actionable negligence claims, and (5) the State does notplead an actionable claim for unjust enrichment. Distributor Defendants incorporate their arguments from their September 28, 2018 motion to dismiss,8 while supplementing these arguments with three recent decisions including City of New Haven v. Purdue Pharma, L.P. (the New Haven Decision); Floyd v. Feygin; and State of Rhode Island v. Atlantic...
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