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Scott v. GlaxoSmithKline Consumer Healthcare

April 12, 2006

ANNETTE SCOTT, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
GLAXOSMITHKLINE CONSUMER HEALTHCARE, L.P., DEFENDANT.



The opinion of the court was delivered by: Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

Plaintiff Annette Scott ("Scott" or "Plaintiff") has filed suit individually and on behalf of others similarly situated against GlaxoSmithKline Consumer Healthcare ("GSK" or "Defendant") for violating the Illinois Consumer Fraud and Deceptive Business Practices Act (the "ICFA"), 815 ILCS 505/1 et. seq., and for unjust enrichment. GSK manufactures Abreva, an over the counter treatment for cold sores, and Valtrex, a prescription drug for the treatment of both cold sores and genital herpes. Scott claims that GSK violated the ICFA when marketing the drugs by promoting the speed with which they supposedly treat the symptoms of various strains of the herpes virus. Scott believes she was injured when she purchased Abreva as a result of those advertisements and has brought suit to recover her damages based on the inflated prices she claims she paid for the drugs. GSK has now filed a motion to dismiss the case for failure to state a cause of action. For the reasons stated below, GSK's motion to dismiss is GRANTED.

Standard

A Rule 12(b)(6) motion tests the sufficiency of a complaint, not the merits of a case. Autry v. Northwest Premium Servs., Inc., 144 F.3d 1037, 1039 (7th Cir. 1998). I should grant Defendant's Motion to Dismiss only if Plaintiff cannot prove any set of facts in support of her claim that would entitle her to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Furthermore, I must accept all well-pleaded factual allegations in the Complaint as true, drawing all reasonable inferences from those facts in Plaintiff's favor. Cleveland v. Rotman, 297 F.3d 569, 571 (7th Cir. 2002). Stated another way, I should not grant Defendant's motion "unless no relief could be granted 'under any set of facts that could be proved consistent with the allegations.'" Nance v. Vieregge, 147 F.3d 589, 590 (7th Cir. 1998) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73 (1984)).

Analysis Standing

GSK argues that any claims involving Valtrex should be dismissed because Plaintiff lacks standing in three ways. First, Plaintiff lacks constitutional standing, because she has not suffered any injury cause by Valtrex. Second, Plaintiff lacks standing under the ICFA because she was not a consumer of Valtrex. Lastly, GSK believes that Plaintiff has not suffered any actual damage as a result of buying Valtrex. In response, Scott claims that she does have constitutional standing, and she also argues that both the ICFA's protection against unfair acts and practices and the juridical link doctrine have the effect of basing her standing for the Valtrex claim on her standing for the Abreva claim.

At this point, I cannot rule on GSK's arguments concerning constitutional or statutory standing. This case was filed as a class action lawsuit. Although GSK is raising the issue of Scott's standing to pursue the Valtrex claims now, it has been clearly established that in the context of class actions, class certification issues must be dealt with before the trial judge decides issue about standing. See Payton v. County of Kane, 308 F.3d 673, 680 (7th Cir. 2002). "This involves defining the class and assessing whether the proposed class representatives can satisfy all four requirements of Rule 23(a), and at least one of the categories of Rule 23(b)." Id. The reason for this order is because certification as a class changes aspects of the suit. "A properly certified class has a legal status separate from and independent of the interest asserted by the named plaintiff." Whitlock v. Johnson, 153 F.3d 380, 384 (7th Cir. 1998). So, even though Plaintiff herself may or may not have suffered an injury, I must defer ruling on whether or not the class as a whole has standing to pursue those Valtrex claims until after I determine that a class should be certified. The issue of actual damages to the class as a result of Valtrex is a statutory standing issue that I must wait to deal with, since Plaintiff has properly alleged class damages.

I will briefly address, however, GSK's incorrect reading of the ICFA to only allow actual "consumers" to file suit. The ICFA's title states that its purpose is to "protect consumers . . . against fraud, unfair methods of competition, and unfair or deceptive acts or practices . . . ." 815 ILCS 505/1. A "consumer" is defined as, "any person who purchases or contracts for the purchase of merchandise not for resale in the ordinary course of his trade or business but for his use or that of a member of his household." Id. This language only shows that the primary purpose of a suit should be to protect consumers, it does not bar other parties that are not consumers from bringing a claim. For example, a competitor could also file suit against a company for its damages as a result of a violation, as long as the competitor also shows "how the complained-of-conduct implicates consumer protection concerns." Speakers of Sport, Inc. v. ProServ, Inc., 178 F.3d 862, 868 (7th Cir. 1999) (quoting Brody v. Finch Univ. of Health Sciences, 698 N.E.2d 257, 268-70 (Ill. App. 1998)). This is the "consumer nexus test."

Therefore, the simple fact that Scott may not be a consumer, by itself, would not disqualify her from filing suit against GSK, as long as she has actual damages that resulted from a violation of the ICFA.

Preemption by the FDA

The ICFA provides an exemption for certain types of behavior by businesses. In particular, it states that nothing in the statute shall apply to "[a]ctions or transactions specifically authorized by laws administered by any regulatory body or officer acting under statutory authority of this State or the United States." 815 ILCS 505/10b(1). GSK argues that Scott's claims cannot proceed because the United States Food and Drug Administration (the "FDA") specifically authorized the company to use the statements in the Valtrex advertisements.

The statements at issue in this case with respect to Valtrex are GSK's claims that Valtrex can be used as a "One-Day Cold-Sore Treatment" or "3-day Outbreak Therapy." The one-day treatment and 3-day therapy claims correspond to the recommended dosage when using Valtrex for cold sores and a recurrent outbreak of genital herpes, respectively. According to GSK, these statements were labeling which was specifically authorized by the FDA. GSK points to the new drug application ("NDA") for Valtrex to show that the recommended dosage was approved by the FDA. Plaintiff contends that she does not dispute the labeling of the drug, but is instead focusing on the marketing, which was not specifically authorized by any regulatory body.

There is some overlap between labeling and marketing. Statements can be, and usually are, both advertising and labeling. See United States v. Kordel, 164 F.2d 913, 915 (7th Cir. 1947), aff'd sub nom Kordel v. United States, 335 U.S. 345 (1948). This is why, even though the FDA usually regulates labeling of drugs and the Federal Trade Commission ("FTC") primarily regulates advertising, neither agency has exclusive jurisdiction. See Working Agreement Between FTC and Food and Drug Administration, 4 Trade Reg. Rep. (CCH) ¶ 9850.01, at 17352. However, the exemption from the ICFA is not available when a business makes statements that "manage to be in technical compliance with federal regulations, but which are so misleading or deceptive in context that federal law itself might not regard them as adequate." Bober v. Glaxo Wellcome PLC, 246 F.3d 934, 941 (7th Cir. 2001). Therefore, federal labeling laws will not necessarily specifically authorize marketing practices. See, e.g., Oshana v. Coca-Cola Co., No. 04 C 3596, 2005 U.S. Dist. LEXIS 14184, at *23 (N.D. Ill. July 13, 2005).*fn1 In this case, there is not enough information in the complaint to state definitively that GSK's statements are labeling that is specifically authorized by the FDA. Plaintiff simply stated that GSK marketed the drug and listed some of the offending statements. Although the claims of one or three-day treatments were authorized when referring to the recommended dosage, viewing everything in the light most favorable to ...


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