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In re Opana ER Antitrust Litigation

United States District Court, N.D. Illinois, Eastern Division

August 11, 2016

IN RE OPANA ER ANTRITRUST LITIGATION MDL No. 2580

          MEMORANDUM OPINION AND ORDER

          Harry D. Leinenweber Judge

         In their Second Consolidated Amended Class Action Complaint, End-Payor Purchaser Plaintiffs (“EPPs”) bring claims under the antitrust, consumer protection, and unjust enrichment laws of numerous states against Endo Health Solutions Inc., Endo Pharmaceuticals Inc., Penwest Pharmaceuticals Co. (collectively, “Endo”), and Impax Laboratories, Inc. (“Impax”) (collectively, the “Defendants”). EPPs contend that Defendants delayed the entry of generic versions of Opana ER to the Oxymorphone ER Market by entering into an illegal reverse payment agreement to settle ongoing patent infringement litigation between Endo and Impax.

         Currently before the Court is Defendants’ Motion to Dismiss EPPs’ Second Consolidated Amended Complaint [ECF No. 188] pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons stated herein, the Motion is granted in part and denied in part.

         I. BACKGROUND

         For the sake of brevity, the Court incorporates by reference its discussion of the underlying statutory framework and factual allegations from its February 10, 2016 Memorandum Opinion and Order [ECF No. 151].

         II. ANALYSIS

         In its February 10, 2016 Memorandum Opinion and Order, the Court dismissed EPPs’ state law consumer protection and unjust enrichment claims because EPPs failed to plead sufficiently such claims under the specific laws of each state. Because the Court dismissed the claims on that basis, it did not reach the other substantive arguments Defendants had made in favor of dismissal. The Court granted EPPs leave to replead all of their state law consumer protection and unjust enrichment claims in a non-conclusory fashion, which they did. Defendants now seek dismissal of EPPs’ unjust enrichment claims under the laws of California, Florida, Illinois, Iowa, Kansas, Maine, Massachusetts, Michigan, Missouri, New Hampshire, North Carolina, North Dakota, Pennsylvania, Rhode Island and Utah and EPPs’ consumer protection claim under Missouri law.

         A. Unjust Enrichment

         1. Illinois Brick

         Defendants first argue that EPPs’ unjust enrichment claims under the laws of Florida, Illinois, Massachusetts, Missouri, Pennsylvania and Rhode Island should be dismissed because these states have not adopted Illinois Brick repealer statutes. In Illinois Brick Co. v. Illinois, the United States 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. Illinois Brick Co. v. Illinois, 431 U.S. 720, 746 (1977). “The policy of Illinois Brick prohibits indirect purchasers from suing the manufacturer to recover any ill-gotten gains the manufacturer has obtained by violating antitrust laws.” In re Flonase Antitrust Litig., 692 F.Supp.2d 524, 542 (E.D. Pa. 2010). Certain states have passed so-called “Illinois Brick repealer statutes” in response to the Supreme Court’s decision in California v. ARC America Corp., in which it held that indirect purchasers may recover damages under state antitrust laws despite Illinois Brick, if the state laws otherwise allow for such recovery. California v. ARC America Corp., 490 U.S. 93, 101 (1989).

         Defendants argue that because Florida, Illinois, Massachusetts, Missouri, Pennsylvania and Rhode Island continue to follow Illinois Brick, EPPs’ unjust enrichment claims under the laws of these states are simply an end-run around the policy choice of Illinois Brick. See, In re Lidoderm Antitrust Litig., 103 F.Supp.3d 1155, 1175 (N.D. Cal. 2015). EPPs respond that, under Rule 8 of the Federal Rules, they are permitted to plead their unjust enrichment claims in the alternative, regardless of whether state antitrust law follows Illinois Brick. The cases EPPs cite in support of this proposition are outliers. See, e.g., United Food & Commercial Workers Local 1776 & Participating Emp’rs Health & Welfare Fund v. Teikoku Pharma USA, Inc., 74 F.Supp.3d 1052, 1089 (N.D. Cal. 2014). Although the Federal Rules generally provide that “[r]elief in the alternative . . . may be demanded, ” Fed.R.Civ.P. 8(a), they do not authorize end-runs around state laws. EPPs cannot avoid Illinois Brick simply by characterizing their unjust enrichment claims as alternative forms of relief. EPPs’ unjust enrichment claims are seeking damages attributable to Defendants’ alleged antitrust conduct. This requested alternative relief is impermissible (regardless of its form) in states that prohibit indirect purchasers from recovering damages for antitrust injuries.

         EPPs next contend that the consumer protection laws of Florida, Massachusetts, Missouri and Pennsylvania either expressly permit, or do not specifically disallow, indirect purchaser actions, as has been recognized by courts in each of these states. The Florida Unfair and Deceptive Trade Practices Act (“FUDTPA”) allows indirect purchases to recover damages for “unfair methods of competition” - including violations of the antitrust laws. Mack v. Bristol-Myers Squibb Co., 673 So.2d 100, 104 (Fla. Dist. Ct. App. 1996). The Massachusetts Consumer Protection Act (“MCPA”) similarly permits indirect purchaser claims based on antitrust violations. Ciardi v. F. Hoffman-La Roche Ltd., 762 N.E.2d 303, 308 (Mass. 2002). Likewise under the Missouri Merchandising Practices Act (“MPA”), Gibbons v. J. Nuckolls, Inc., 216 S.W.3d 667, 670 (Mo. 2007), and the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“PUTPCL”), Gardner v. State Farm Fire & Cas. Co., 544 F.3d 553, 564 (3d Cir. 2008). EPPs have states claims under each of these statutes. Because indirect purchasers are allowed to recover damages for antitrust conduct under the statutes of these states, there is no reason to bar EPPs’ unjust enrichment claims in Florida, Massachusetts, Missouri and Pennsylvania.

         In an attempt to save their unjust enrichment claims under Illinois and Rhode Island laws, EPPs argue that these claims are permitted as independent causes of action not reliant on the states’ antitrust laws. But the legislative intent behind permitting an unjust enrichment claim to stand independently of any other claim does not reflect a policy choice to allow indirect purchaser recovery for antitrust conduct in the same way as the consumer protection claims just discussed. In fact, the legislature of Illinois has adopted a clear policy prohibiting indirect purchaser antitrust claims. See, 740 ILCS 10/7. And although Rhode Island recently (on July 15, 2013) enacted an Illinois Brick repealer statute, R.I. Gen. Laws § 6-37-7(d), that statute does not apply retroactively to conduct that occurred prior to its enactment. Allowing EPPs to maintain their Illinois and Rhode Island unjust enrichment claims would enable them to sidestep impermissibly those states’ prohibitions on antitrust recovery for indirect purchasers. Therefore, EPPs’ unjust enrichment claims under the laws of Illinois and Rhode Island are dismissed with prejudice.

         2. ...


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