192 F. Supp. 3d 963
N.D. Ill.2016Background
- Hillman and Local 404 (the "Funds") are third-party payors (TPPs) who reimbursed Depakote prescriptions and sued Abbott and AbbVie for promoting Depakote for off-label uses from 1998–2012.
- Plaintiffs allege Abbott created and controlled three marketing "enterprises" (CENE, PharmaCare, ABcomm) that used paid physicians, CME materials, sales incentives, and concealed messaging to increase off-label prescribing.
- Alleged misconduct included disguised journal supplements, practice guidelines funded by Abbott, speaker payments, sales scripts and contests, and avoidance of call-note documentation about off-label discussions.
- Plaintiffs claim Abbott knew Depakote was ineffective or unsafe for certain off-label uses (e.g., agitation in dementia) yet continued marketing; Abbott settled related qui tam and government claims for $1.6 billion in 2012.
- The Funds assert RICO violations (18 U.S.C. § 1962(c), (d)), New York GBL § 349, and unjust enrichment (NY & MA); Abbott moved to dismiss.
- The district court dismissed the RICO claims for failure to plead proximate causation and declined to exercise supplemental jurisdiction over state claims, dismissing them without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Funds pleaded RICO proximate cause | Abbott's off-label marketing foreseeably caused TPPs to pay for Depakote; foreseeability suffices | Plaintiffs lack direct injury because misrepresentations were made to doctors/patients, not to TPPs; intervening prescribing decisions break causation | Dismissed: proximate causation not alleged; chain too attenuated |
| Whether direct misrepresentations to TPPs alleged | Funds argue intermediaries don’t defeat causation if injury is foreseeable | Abbott says no allegations of direct communications to Funds or that Funds relied on any misrepresentation | Held: no direct misrepresentations pleaded; that distinction is dispositive |
| Whether RICO conspiracy (§ 1962(d)) survives | Funds: conspiracy claim relies on substantive RICO predicates | Abbott: conspiracy fails if substantive RICO fails | Dismissed: conspiracy claim fails with substantive RICO claim |
| Whether federal dismissal requires dismissal of state claims | Funds: seek to proceed on state claims if federal dismissed | Abbott: state claims also deficient and some time-barred | Court declined supplemental jurisdiction and dismissed state claims without prejudice (defers merits) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must be facially plausible)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- Holmes v. Sec. Inv’r Prot. Corp., 503 U.S. 258 (1992) (RICO proximate-cause directness requirement)
- Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) (focus on whether violation led directly to plaintiffs’ injuries)
- Hemi Group, LLC v. City of New York, 559 U.S. 1 (2010) (reiterating Holmes; rejects foreseeability test for RICO proximate cause)
- Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) (direct result/foreseeability discussion in mail-fraud RICO context)
- DeGuelle v. Camilli, 664 F.3d 192 (7th Cir. 2011) (RICO elements and standing)
- RWB Servs., LLC v. Hartford Computer Grp., Inc., 539 F.3d 681 (7th Cir. 2008) (directness and damages concerns in RICO)
- BCS Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750 (7th Cir. 2011) (intervening predictable events may not defeat causation)
- United Food & Commercial Workers Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010) (TPP RICO claim too attenuated where misrepresentations were directed to doctors)
- In re Neurontin Mktg. & Sales Practices Litig., 712 F.3d 21 (1st Cir. 2013) (contrasting cases where manufacturer directly targeted TPPs)
- In re Avandia Mktg., Sales Practices & Prod. Liab. Litig., 804 F.3d 633 (3d Cir. 2015) (finding proximate cause where misrepresentations caused TPPs to place drug on formularies)
- Lexmark Int’l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014) (proximate-cause limits; caution against stretching causation beyond first step)