Vess v. Ciba-Geigy Corp. Usa, No. 01-55834.

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Writing for the CourtWilliam A. Fletcher
Citation317 F.3d 1097
Decision Date31 January 2003
Docket NumberNo. 01-55834.
PartiesTodd D. VESS, a minor; Deborah Vess, his Guardian ad Litem, Individually, on behalf of those similarly situated, and on behalf of the General Public of the State of California, Plaintiffs-Appellants, v. CIBA-GEIGY CORP. USA; Novartis Pharmaceuticals Corporation; Children and Adults with Attention-Deficit/Hyperactivity Disorder (CHADD); American Psychiatric Association, Defendants-Appellees.

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317 F.3d 1097
Todd D. VESS, a minor; Deborah Vess, his Guardian ad Litem, Individually, on behalf of those similarly situated, and on behalf of the General Public of the State of California, Plaintiffs-Appellants,
v.
CIBA-GEIGY CORP. USA; Novartis Pharmaceuticals Corporation; Children and Adults with Attention-Deficit/Hyperactivity Disorder (CHADD); American Psychiatric Association, Defendants-Appellees.
No. 01-55834.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted March 8, 2002.
Filed January 31, 2003.

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Donald F. Hildre and Peggy Reali, Dougherty, Hildre, Dudek & Haklar, San Diego, CA; John P. Coale and Julia McInerny, Coale, Cooley, Lietz & McInerny, Washington, DC; Richard F. Scruggs, Sidney A. Backstrom and Robin Reid Boswell, Scruggs Legas, Pascagoula, MS; Marc C. Saperstein and Kevin Decie, Davis, Saperstein & Solomon, Teaneck, NJ; C. Andrews Waters, Waters & Kraus, Dallas, TX, for the plaintiffs-appellants.

Roxanne M. Wilson, Arter & Hadden LLP, Los Angeles, CA; James A. O'Neal, Bruce Jones, Joseph M. Price, and Bridget M. Ahmann, Faegre & Benson LLP, Minneapolis, MN, for defendants-appellees Ciba-Geigy/Novartis.

Edward D. Chapin, Chapin, Shea, McNitt & Carter, San Diego, CA; Gerald D.C. Zingone, Arent, Fox, Kintner, Plotkin & Kahn, PLLC, Washington, DC, for defendant-appellee Children and Adults With Attention Deficit/Hyperactivity Disorder.

David J. Noonan, Post Kirby Noonan & Sweat, San Diego, CA; Luther Ziegler, William L. Anderson and Laurel Pyke Malson, Crowell & Moring LLP, Washington, DC, for defendant-appellee American Psychiatric Association.

Appeal from the United States District Court for the Southern District of California; Rudi M. Brewster, District Judge, Presiding. D.C. No. CV-00-01839-RMB.

Before WARDLAW, W. FLETCHER, Circuit Judges, and WHYTE,* District Judge.

OPINION

WILLIAM A. FLETCHER, Circuit Judge.


Plaintiff-Appellant Todd D. Vess brought this diversity class action claiming that three defendants acted illegally to increase sales of the prescription drug Ritalin, in violation of the California Consumers Legal Remedies Act ("CLRA"), Cal. Civ.Code § 1750 et seq., and California's unfair business practice laws, Cal. Bus. & Prof.Code §§ 17200, 17500. The district court dismissed Vess's complaint as to all three defendants for failure to plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b); dismissed the complaint as to two of the defendants for failure to state a claim under Rule 12(b)(6); granted all three defendants' motion to strike under California's anti-Strategic Lawsuits Against Public Participation ("anti-SLAPP") statute, Cal. Civ. Pro.Code § 425.16; and granted attorneys' fees to all three defendants pursuant to the anti-SLAPP statute.

For the reasons that follow, we affirm in part, reverse in part, and remand for further proceedings.

I. Background

Ritalin, a Schedule II controlled substance, is commonly prescribed for Attention Deficit Disorder/Attention Deficit Hyperactivity Disorder ("ADD/ADHD"). Vess alleges that he "was prescribed, and

Page 1101

purchased, and ingested" Ritalin when he was nine years old. Defendants-Appellees are: Novartis Pharmaceuticals ("Novartis") (the successor in interest to named defendant Ciba-Geigy Corp.), the primary or exclusive manufacturer of Ritalin in the United States since 1955; the American Psychiatric Association ("APA"), publisher of the Diagnostic and Statistical Manual of Mental Disorders ("DSM"), commonly used by medical professionals to diagnose ADD/ADHD; and the nonprofit advocacy group Children and Adults with Attention Deficit/Hyperactivity Disorder ("CHADD").

Vess's first amended complaint alleges that the three defendants have acted illegally to increase sales of Ritalin. The complaint alleges an illegal conspiracy involving all three defendants, and illegal individual actions (and inactions) by defendant Novartis.

The complaint alleges that Novartis, the manufacturer of Ritalin, has made substantial financial contributions to the APA and CHADD, and that it has failed to disclose the extent of those contributions. It further alleges that Novartis "planned, conspired, and colluded" with the APA and CHADD to "develop, promote, broaden and confirm the diagnosis" of ADD/ADHD, in order to increase the market for Ritalin. The complaint also alleges that Novartis has failed fully to disclose information regarding the side effects of Ritalin, and that Novartis has failed to disclose the drug's "limited effectiveness."

The complaint alleges that the APA, as part of the conspiracy with Novartis and CHADD, "fraudulently and falsely" represented that the diagnostic criteria for ADD in the DSM were scientifically reliable; that "[i]n an effort to cover up this fraud," the APA improperly clustered data from tests of diagnostic criteria for ADD with data from tests of diagnostic criteria for different and unrelated medical conditions; and that the APA "purposefully and fraudulently" failed to use objective criteria in the creation and promulgation of diagnostic criteria. The complaint further alleges that the APA has "fraudulently failed to disclose, through misrepresentations and omissions," the role of the drug industry and, in particular, Novartis, "in the creation, promulgation and revisions of the DSM or the financial connection between its committee members and [Novartis]."

Finally, the complaint alleges that CHADD, in exchange for financial contributions from Novartis, "deliberately attempted to increase the sales of Ritalin, and to increase the supply of [the drug] available in the United States, and to reduce or eliminate laws and restrictions concerning the use of Ritalin." The complaint alleges that during this time CHADD was misrepresenting itself to the public as a neutral nonprofit organization dedicated to persons suffering from ADD/ADHD. In support of its allegation that CHADD participated in the fraudulent conspiracy, the complaint alleges that CHADD failed to disclose "that it has received significant if not life sustaining contributions from [Novartis]," and contends that CHADD has "distributed misinformation."

Vess asserts the same three causes of action against all of the defendants. Vess's first cause of action asserts a violation of Cal. Civ.Code § 1770, which prohibits "unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or which results in the sale ... of goods or services to any consumer." Vess's second cause of action asserts a violation of Cal. Bus. & Prof.Code § 17200, which prohibits "unlawful, unfair or fraudulent business act[s] or practice[s]" and "unfair, deceptive, untrue or misleading advertising." Vess's third

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cause of action asserts a violation of Cal. Bus. & Prof.Code § 17500, which prohibits "any statement" that is "untrue or misleading" and made with the "intent directly or indirectly to dispose of" property or services.

All three defendants moved to dismiss Vess's original complaint under Federal Rule of Civil Procedure 9(b) for failure to plead averments of fraud with particularity. The APA and CHADD also moved to dismiss the complaint under Rule 12(b)(6) for failure to state a claim. All three defendants filed motions to strike pursuant to California's anti-SLAPP statute and for attorneys' fees under that statute. Without ruling on the motions, the district court granted Vess leave to file a first amended complaint. After Vess did so, the defendants renewed their motions as to the first amended complaint (the allegations of which are described above). The district court granted without prejudice all three defendants' motion to dismiss Vess's complaint under Rule 9(b), and the APA and CHADD's motion to dismiss under Rule 12(b)(6). It did not rule on the motions to strike under the anti-SLAPP statute. Vess declined to amend his complaint again. The district court then dismissed with prejudice under Rule 9(b) as to all three defendants, and under Rule 12(b)(6) as to the APA and CHADD. It granted the motions to strike and awarded attorneys' fees to all three defendants under the anti-SLAPP statute.

We review dismissals under Rules 9(b) and 12(b)(6) de novo. See United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1051 (9th Cir. 2001); Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1035 (9th Cir.2002). We review the granting of defendants' motion to strike under the anti-SLAPP statute de novo. See Metabolife Int'l., Inc. v. Wornick, 264 F.3d 832, 839 (9th Cir.2001). We review an award of attorneys' fees pursuant to state law for abuse of discretion. See Roy Allen Slurry Seal v. Laborers Int'l Union, 241 F.3d 1142, 1145 (9th Cir. 2001).

II. Applicability of Rule 9(b)

Vess contests two foundational propositions concerning the applicability of Rule 9(b). The first proposition is that the pleading requirements of Rule 9(b) apply to both state- and federal-law causes of action. Vess argues that the doctrine of Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), precludes application of Rule 9(b) to a state-law cause of action, but his argument is based on a misunderstanding of Erie and of the scope of the federal rules. Erie applies irrespective of whether the source of subject matter jurisdiction is diversity or federal question. See Maternally Yours v. Your Maternity Shop, Inc., 234 F.2d 538, 540 n. 1 (2d Cir.1956). The Federal Rules of Civil Procedure apply irrespective of the source of subject matter jurisdiction, and irrespective of whether the substantive law at issue is state or federal. See Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965).

The Constitution and the Rules Enabling Act authorize and, at the same time, limit the scope of the federal rules. The "constitutional provision...

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3473 practice notes
  • United Energy Trading, LLC v. Pac. Gas & Elec. Co., Case No. 15-cv-02383-RS
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • November 20, 2015
    ...so that they can defend against the charge and not just deny that they have done anything wrong.” Vess v. Ciba–Geigy Corp. U.S.A. , 317 F.3d 1097, 1106 (9th Cir.2003). A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of ......
  • Pub. Lands For People Inc. v. United States Dep't of Agriculture, No. CIV. S-09-1750 LKK/JFM
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 5, 2010
    ...X and XIV are DISMISSED FOR FAILURE TO STATE A CLAIM. Dismissal of these claims is WITHOUT PREJUDICE. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108 (9th Cir.2003) (Initial dismissal under Fed.R.Civ.P. 12(b)(6) should ordinarily be without prejudice).4. Claims II through IX, XI throu......
  • Tietsworth v. Sears, Case No. 5:09-CV-00288 JF (HRL).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • March 31, 2010
    ...claims alleging fraud are subject to the heightened pleading requirements of Fed.R.Civ.P. 9(b). See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir.2003) (if “the claim is said to be ‘grounded in fraud’ or to ‘sound in fraud,’ [then] the pleading of that claim as a whole must ......
  • Greater L. A. Agency On Deafness, Inc. v. Cable News Network, Inc., No. 12–15807.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 5, 2014
    ...F.3d 422]Hilton v. Hallmark Cards, 599 F.3d 894, 906 (9th Cir.2010) (amended opinion) (collecting cases); Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1109 (9th Cir.2003) (same). In determining whether GLAAD's action must be stricken under the broadly construed anti-SLAPP statute, we engage......
  • Request a trial to view additional results
3442 cases
  • United Energy Trading, LLC v. Pac. Gas & Elec. Co., Case No. 15-cv-02383-RS
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • November 20, 2015
    ...so that they can defend against the charge and not just deny that they have done anything wrong.” Vess v. Ciba–Geigy Corp. U.S.A. , 317 F.3d 1097, 1106 (9th Cir.2003). A motion to dismiss a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of ......
  • Pub. Lands For People Inc. v. United States Dep't of Agriculture, No. CIV. S-09-1750 LKK/JFM
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
    • August 5, 2010
    ...X and XIV are DISMISSED FOR FAILURE TO STATE A CLAIM. Dismissal of these claims is WITHOUT PREJUDICE. See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1108 (9th Cir.2003) (Initial dismissal under Fed.R.Civ.P. 12(b)(6) should ordinarily be without prejudice).4. Claims II through IX, XI throu......
  • Tietsworth v. Sears, Case No. 5:09-CV-00288 JF (HRL).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
    • March 31, 2010
    ...claims alleging fraud are subject to the heightened pleading requirements of Fed.R.Civ.P. 9(b). See Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103-04 (9th Cir.2003) (if “the claim is said to be ‘grounded in fraud’ or to ‘sound in fraud,’ [then] the pleading of that claim as a whole must ......
  • Greater L. A. Agency On Deafness, Inc. v. Cable News Network, Inc., No. 12–15807.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • February 5, 2014
    ...F.3d 422]Hilton v. Hallmark Cards, 599 F.3d 894, 906 (9th Cir.2010) (amended opinion) (collecting cases); Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1109 (9th Cir.2003) (same). In determining whether GLAAD's action must be stricken under the broadly construed anti-SLAPP statute, we engage......
  • Request a trial to view additional results
1 books & journal articles
  • Stolen Plausibility
    • United States
    • Georgetown Law Journal Nbr. 110-2, December 2021
    • December 1, 2021
    ...a party must state with particularity the circumstances constituting fraud or mistake.”); see, e.g., Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003) (observing that “only allegations (‘averments’) of fraudulent conduct must satisfy the heightened pleading requirements of R......

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