103 F. Supp. 3d 1155
N.D. Cal.2015Background
- The consolidated suits challenge a 2012 settlement between Endo defendants and Watson that ended patent litigation in exchange for brand Lidoderm supplies to Watson and a period of generic exclusivity, allegedly enabling supracompetitive prices.
- Plaintiffs include End-Payor Plaintiffs (EPPs) and GEHA (a health plan) asserting state-law antitrust, consumer-protection, and unjust-enrichment claims in addition to federal claims previously addressed by the court.
- Defendants moved to dismiss numerous state-law claims in the Second Amended Complaints; the court analyzed each state’s statute and relevant precedent individually.
- Key recurring legal themes: Illinois Brick bar and state "repealer" statutes for indirect purchasers; whether consumer-protection statutes require pre-suit demand, consumer status, intrastate nexus, or allegations of affirmative deception; and whether unjust-enrichment claims may proceed where statutory claims fail.
- The court granted dismissal in many states (some with prejudice), denied dismissal as to others, and granted leave to amend limited claims (notably the EPP Massachusetts claim).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Pre-suit demand under Mass. CPA for EPP Galloto | No demand required because defendants have no place of business or assets in Massachusetts | EPPs failed to plead facts showing defendants lack Massachusetts presence, so demand requirement applies | Mass. CPA claim dismissed with leave to amend to add facts or comply with demand requirement |
| RI antitrust claims (repealer statute) | Continuing injury after repealer allows post-2013 damages even though conduct was 2012 | Repealer is prospective; conduct predates repeal so indirect-purchaser claim barred | RI antitrust claim dismissed with prejudice (not retroactive) |
| Alaska consumer-protection standing | Broad statute language permits indirect purchasers to recover | Alaska antitrust amendment and precedent reserve monetary relief for indirect purchasers to AG; no Alaska authority allowing private indirect suits | Alaska claim dismissed with prejudice |
| Massachusetts GEHA standing under Mass. CPA §11 | GEHA is an "end payor" and thus a consumer for retail purchases | Defendants: GEHA acted in trade or commerce (health-plan business) so §11 inapplicable | GEHA dismissed with prejudice; court finds GEHA acted for business reasons and lacks §11 standing |
| Consumer-protection: "consumer" status (D.C., Montana) | GEHA is a joint end-payor who paid retail pharmacies; thus consumer | Defendants: GEHA’s payments are wholesale/administrative, not retail consumer transactions | D.C. and Montana claims dismissed with prejudice (GEHA not a consumer under those statutes) |
| Consumer-protection: fraud/deception sufficiency in many states (e.g., AR, ID, ME, MI, MN, OR, PA, SD, WV) | Alleged fraud on the PTO and settlement scheme suffice as deceptive conduct damaging purchasers | Many states require deception directed to consumers or affirmative misrepresentations; PTO fraud and upstream conduct insufficient | Multiple state claims dismissed with prejudice (court follows state-law limits requiring consumer-directed deception) |
| Intrastate nexus (NY, NC) | GEHA alleges purchases in-state (e.g., NY) so §349/N.C. UDTPA apply | Defendants argue deception occurred elsewhere and effects in-state are incidental | NY: claim survives (in-state purchases pleaded). NC: claim survives (in-state injury alleged) |
| Unjust enrichment for states without Illinois Brick repealer | Plaintiffs seek restitution despite lack of statutory indirect-purchaser remedy | Defendants: Illinois Brick/legislative policy bars indirect recovery absent state authority | Court follows majority: unjust-enrichment claims dismissed with prejudice in listed states lacking repealer |
| Autonomous unjust enrichment where statutory claims fail | GEHA says autonomous restitution is available even if statutory claims fail | Defendants argue allowing autonomous claims would circumvent state legislative schemes | Court: autonomous unjust-enrichment claims must be supported by state authority; otherwise dismissed (many states dismissed with prejudice) |
| Unjust enrichment: "direct benefit" requirement (varies by state: AZ, D.C., KS, NC, ND, TN) | GEHA: benefit flowed up the distribution chain; payment of inflated price enriched defendants | Defendants: many states require plaintiff to have conferred a direct benefit on defendant to plead unjust enrichment | Court applies state-specific precedent: allows claims in some jurisdictions (AZ, D.C., KS, NC, TN) but dismisses under ND and NY and other states where direct-benefit rule controls |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (threadbare recitals insufficient under Rule 8)
- Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (continuing conspiracy accrual rule explanation)
- Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC, 737 F. Supp. 2d 380 (E.D. Pa. 2010) (antitrust-based consumer-protection claims analysis; PTO fraud and consumer statutes)
- In re DDAVP Indirect Purchaser Antitrust Litig., 903 F. Supp. 2d 198 (S.D.N.Y. 2012) (PTO/FDA fraud allegations held sufficient in some consumer-protection contexts)
- In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig., 64 F. Supp. 3d 665 (E.D. Pa. 2014) (deceptive dissemination allegations sustaining consumer-protection claims)
- In re TFT-LCD (Flat Panel) Antitrust Litig., 599 F. Supp. 2d 1179 (N.D. Cal. 2009) (unjust-enrichment and indirect-purchaser analyses)