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In re Aggrenox Antitrust Litigation

United States District Court, D. Connecticut

August 9, 2016

IN RE AGGRENOX ANTITRUST LITIGATION THIS DOCUMENT RELATES TO INDIRECT-PURCHASER ACTIONS

          MEMORANDUM OF DECISION AND ORDER

          STEFAN R. UNDERHILL UNITED STATES DISTRICT JUDGE

         On March 23, 2015, I issued a decision on several motions to dismiss in this complex multidistrict litigation (“MDL”). See In re Aggrenox Antitrust Litig., 94 F.Supp.3d 224 (D. Conn. 2015) (doc. # 229) (hereinafter “March 23 Order”). I later expanded upon and clarified some aspects of that decision in an order granting a motion to certify it for interlocutory appeal under 28 U.S.C. § 1292(b). See In re Aggrenox Antitrust Litig., 2015 WL 4459607 (D. Conn. July 21, 2015) (doc. # 311) (hereinafter “July 21 Order”).[1] The March 23 Order included many subsidiary rulings so its holding was somewhat complicated, see 94 F.Supp.3d at 257-58, but the relevant portion for present purposes is that the motions to dismiss indirect-purchaser actions were granted in part and denied in part.

         At that time, the indirect-purchaser actions included two complaints: the putative-class complaint of indirect-purchaser plaintiffs (“IPPs, ” though they style themselves end-payor plaintiffs or EPPs), and a complaint filed by Humana, a large indirect purchaser and opt-out from the putative class. Humana and the IPPs filed amended complaints, though they only actually amended certain portions while leaving others unmodified, re-pleading them merely “to preserve appellate rights.” The defendants filed motions to dismiss the amended complaints (doc. ## 290, 291), and I heard oral argument on them, but I took the motions under advisement in part because new actions were being added to the MDL that appeared likely to raise common issues that could efficiently be taken up together.

         There are now seven operative complaints in this case, which were filed respectively by: (1) direct-purchaser putative-class plaintiffs (“DPPs”) (doc. # 105/109); (2) IPPs (doc. # 263); (3) Humana (doc. # 239); (4) Walgreen plaintiffs[2] (doc. # 340); (5) Rite Aid plaintiffs[3] (doc. # 341) (the Walgreens and Rite Aid plaintiffs are generally referred to collectively as the “retailer plaintiffs”); (6) Louisiana Health Service Indemnity Co., d/b/a BlueCross/BlueShield of Louisiana (“Louisiana Health, ” though they style themselves “BCBSLA”); and (7) CVS Pharmacy, Inc.[4]

         After oral argument on a motion to dismiss the retailer plaintiffs’ complaints, which pertained principally to the assignment of rights from (direct-purchaser) wholesalers to (indirect-purchaser) retailers, I denied the motion from the bench (doc. # 338).[5] I later held oral argument on a motion to dismiss Louisiana Health’s complaint and took the motion under advisement. The motions to dismiss that remain pending are therefore the motion to dismiss the IPPs’ amended complaint (doc. # 290), the motion to dismiss Humana’s amended complaint (doc. # 291), and the motion to dismiss Louisiana Health’s complaint (doc. # 374). Those motions involve many of the same or related issues, and each of them is granted in part and denied in part, as follows.

         I. Standard of Review

         The Rule 12(b)(6) motions to dismiss for failure to state a claim are of course reviewed by the same familiar standard that I applied and described at greater length in the March 23 Order. I accept the material facts alleged in the complaints as true, draw all reasonable inferences in favor of the plaintiffs, and decide on a claim-by-claim basis whether it is plausible that the plaintiffs have a valid claim for relief. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007); Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996). To survive a motion to dismiss, claims must be supported by factual allegations that are “enough to raise a right to relief above the speculative level” and with “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 555, 570; see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.”). The plausibility standard set forth in Twombly and Iqbal obligates the plaintiff to “provide the grounds of his entitlement to relief” through more than “labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555 (quotation marks omitted).

         II. Reasserted Dismissed Claims

         The IPPs and Humana included without substantive revision in their amended complaints some claims[6] that I dismissed in the March 23 Order. They have reasserted them for the asserted purpose of preserving their rights on appeal and do not challenge the defendants’ renewed motions to dismiss them, except by incorporating by reference their arguments opposing the first motions to dismiss. I do not believe repleading claims was necessary to preserve appellate rights and reassert my dismissal of those claims, granting the defendants’ motions to dismiss them to the same extent and for the same reasons as described in the March 23 Order.

         III. Injunctive Relief

         The IPPs, Humana, and Louisiana Health all plead claims for injunctive relief, and the defendants move to dismiss them on the same basis that they moved to dismiss similar claims pleaded by the retailer plaintiffs. The defendants argue that the claims for injunctive relief are moot, because there is nothing left to enjoin: the challenged agreements were made in 2008, and even if they did unlawfully delay the entry of Aggrenox generics to the market, those generics have now in fact entered (and have been on the market since July 2015). The plaintiffs therefore can seek damages for alleged overcharges already incurred, but they cannot plead ongoing harm or a credible threat of future harm and thus cannot need (or even stand to benefit from) an injunction. The plaintiffs argue somewhat vaguely about the ongoing threat that the generics could be removed from the market (though they plead no plausible factual basis to justify that concern) and assert that even if the generics are not removed, the injunctive claims are not moot because I have the authority (and ought to exercise it) to enjoin bad actors from committing other similar bad acts in the future.

         Now that generic entry has occurred, the plaintiffs’ arguments for an injunction are thin, and the defendants have a strong argument to dismiss those claims.[7] In some other circumstances that argument might be still more persuasive. But as I observed from the bench when I denied the motion to dismiss the retailer plaintiffs’ complaints, as a practical matter, the stakes of this argument in this case are exceedingly low. This case is not about injunctive relief, which is at best a peripheral issue, and the case will proceed with those claims or without them. If they turn out not to be moot (however miniscule the risk), it will be significant to have wrongly dismissed them. But if they are indeed moot, as the defendants plausibly argue, then they will fall by the wayside and will not be pursued at trial, and their ongoing inclusion at this stage will not prejudice any party in any way. I therefore deny the motions to dismiss claims of injunctive relief.

         IV. Louisiana Health

         As an initial matter, I reassert the reasoning and the holdings of the March 23 Order and the July 21 Order, as applied to Louisiana Health’s claims and the motion to dismiss them. To the extent that the defendants renew arguments that I rejected in those orders, I reject them again. Notably, I adhere to my ruling on the significance of Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263 (2d Cir. 1979), which is discussed at length in the March 23 Order, 94 F.Supp.3d at 237-39, and in the July 21 Order. In short, “a purchaser suing a monopolist for overcharges in injured anew by each overcharge, ” id. at 238, and “[c]laims are therefore not time-barred that stem from alleged overcharges incurred within the relevant statutory period, whatever that period may be for a particular statute, measured backward from the filing of the claims.” Id. at 248.[8]

         I similarly adhere to other rulings from the earlier orders, and make new rulings relating to Louisiana Health’s claims, as follows.

         A. Consumer Protection and Unjust Enrichment Claims

         Louisiana Health has pleaded-quite like the other indirect purchasers pleaded- essentially undifferentiated claims under the separate consumer-protection laws of fifteen states in its Count Eight. It also pleads generic unjust enrichment as its Count Nine, without even listing the jurisdictions whose law(s) it invokes. It treats all of those laws-which may or may not be materially different from each other, and which may or may not protect against the particular harms that antitrust law addresses-as simple surrogates for antitrust law, with very little elaboration. I held in the March 23 Order that:

The indirect purchasers and Humana have listed claims under very many state laws, but they have not truly pleaded claims under those laws sufficient to show their entitlement to recovery under them, as required by Rule 8. See Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (“A pleading that offers labels and conclusions or formulaic recitation of the elements of a cause of action will not do.”). Rather, they have pleaded federal antitrust claims and the factual foundation for them, viable under [FTC v.] Actavis, [133 S.Ct. 2223 (2013), ] and they merely allege that those claims are also actionable under general consumer-protection laws and as unjust enrichment.

94 F.Supp.3d at 255. Louisiana Health’s complaint is no better on this score than the other complaints, and I therefore adhere to that ruling. The motion to dismiss is similarly “granted with respect to all such claims, without prejudice to repleading in nonconclusory fashion.” Id. at 256.

         B. Rhode Island

         A basic and complicating feature of all indirect-purchaser antitrust actions is the rule of Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). In that case, as I wrote in the March 23 Order, “the Supreme Court held that only the overcharged direct purchaser, and no one else in the chain of distribution, can recover damages under federal antitrust law.” 94 F.Supp.3d at 248. The Court gave indirect purchasers an opening, however, in California v. ARC America Corp., 490 U.S. 93 (1989), where it held that Illinois Brick “does not prevent indirect purchasers from recovering damages under state antitrust laws where the state laws otherwise allow it (and many states have passed so-called ‘Illinois Brick repealers’ in order to do so).” 94 F.Supp.3d at 248. A recurring issue in this case, therefore, is whether the Illinois Brick rule applies to the antitrust law of particular states.

         I noted in the March 23 Order that “Rhode Island was an Illinois Brick state until its legislature enacted a repealer on July 15, 2013.” Id. at 252. The parties disputed whether that repealer should be applied retroactively, and I concluded that it should not. I adhere to that ruling with respect to Louisiana Health, and hold that its “claims under the Rhode Island antitrust statute alleging overcharges before July 15, 2013 are dismissed, ” id. at 253, but that the motion to dismiss Rhode Island antitrust claims is denied with respect to alleged overcharges incurred from that date forward.

         C. Louisiana Antitrust and Consumer Protection Claims

         Louisiana has not passed an Illinois Brick repealer and there appears to be no authoritative statement from Louisiana’s courts that the logic of Illinois Brick does not apply to the state’s own antitrust law. Louisiana Health argues that the logic of requiring a repealer is flawed, because Illinois Brick was only concerned with federal antitrust law. Though it is true that the Supreme Court in Illinois Brick was interpreting federal law, I adhere to the reasoning of the March 23 Order that “[i]n the absence of a clear decision-by either the legislature or by the jurisdiction’s own courts-to allow indirect-purchaser recovery, the antitrust laws of a state (or territory) are interpreted as presumptively consistent with federal law.” 94 F.Supp.3d at 252. Louisiana is of course free to depart from federal antitrust law and allow indirect-purchaser recovery under its own law, but I cannot conclude that it has done so unless and until Louisiana’s legislature or courts clearly say that it has done so.

         Louisiana Health filed a notice of supplemental authority (doc. # 483), alerting me to a decision from a Louisiana trial judge that appears to allow indirect-purchaser recovery under Louisiana antitrust law, [9] but it does so by means of a one-sentence decision that simply adopts the plaintiff’s brief as its reasons. It also appears to conflict with the decision of another Louisiana trial judge, [10] and with the decisions of several federal courts, including the Fifth Circuit Court of Appeals. See, e.g., Free v. Abbott Laboratories, Inc., 176 F.3d 298, 300-01 (5th Cir. 1999); In re New Motor Vehicles Canadian Exp. Antitrust Litig., 350 F.Supp.2d 160, 170 (D. Me. 2004); In re Relafen Antitrust Litig., 225 F.R.D. 14, 27 (D. Mass. 2004); FTC v. Mylan Labs., Inc., 99 F.Supp.2d 1, 6-7 (D.D.C. 1999). I agree with Louisiana Health that none of those decisions is authoritative or binding on me, but they follow the same approach I am following and come to the same conclusion.

         The same reasoning applies to claims under the Louisiana Unfair Trade Practices Act. Louisiana Health pleaded that claim as a separate count (Count Six) from the omnibus count of various state consumer-protection claims (Count Eight) discussed above, and it suffers the same infirmity of assuming the non-obvious proposition that a generic consumer-protection statute reaches the same conduct reached by antitrust law and can therefore act as surrogate for it. But more significantly, even if that proposition is correct and any antitrust claim can also be brought under consumer-protection law, that formality of pleading cannot avoid the rule of Illinois Brick. If Louisiana’s law redundantly allows the same antitrust claim to be brought under multiple laws, the Illinois Brick rule will ...


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