in the united states district court for the eastern ... · 3 (202) 344-4000 [email protected]...

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: GENERIC PHARMACEUTICALS

PRICING ANTITRUST LITIGATION

MDL 2724

16-MD-2724

HON. CYNTHIA M. RUFE

IN RE: CLOBETASOL CASES

THIS DOCUMENT RELATES TO:

ALL END-PAYER ACTIONS

16-CB-27242

[PROPOSED] ORDER

AND NOW, this day of , 2018, upon consideration of Defendants’

Joint Motion to Dismiss The Consolidated End-Payer Class Action Complaint pursuant to Federal

Rule of Civil Procedure 12(b)(6), and any responses or replies thereto, it is hereby ORDERED

that the Joint Motion to Dismiss is GRANTED. The Consolidated End-Payer Class Action

Complaint is DISMISSED WITH PREJUDICE in its entirety.

BY THE COURT:

The Honorable Cynthia M. Rufe, J.

Case 2:16-CB-27242-CMR Document 129 Filed 10/06/17 of 64





MDL 2724

16-MD-2724





16-CB-27242

ORAL ARGUMENT REQUESTED

DEFENDANTS’ JOINT MOTION TO DISMISS THE CONSOLIDATED

END-PAYER CLASS ACTION COMPLAINT

Pursuant to Federal Rule of Civil Procedure 12(b)(6), and for the reasons set forth in the

accompanying Memorandum of Law and the exhibits thereto, the omnibus Joint Motions to

Dismiss the Direct Purchaser and Indirect Reseller Complaints, and each individual motion to

dismiss the Clobetasol Actions, Defendants Actavis Holdco U.S., Inc., Actavis Pharma, Inc.,

Akorn, Inc., Akorn Sales, Inc., Hi-Tech Pharmacal Co., Inc., Perrigo New York, Inc., Sandoz,

Inc., Fougera Pharmaceuticals, Inc., Taro Pharmaceuticals U.S.A., Inc., Wockhardt USA LLC,

and Morton Grove Pharmaceuticals, Inc. (collectively, “Defendants”), by and through their

undersigned counsel, hereby respectfully move to dismiss the Consolidated End-Payer Class

Action Complaint in the Clobetasol Actions. Pursuant to Rule 7.1(f) of the Local Rules of Civil

Procedure, Defendants request oral argument on their Joint Motion to Dismiss.


2

Pursuant to Section 2.4 of Pretrial Order No. 26 (16-MD-2724, ECF 373), Section 2.3 of

Pretrial Order No. 29 (16-MD-2724, ECF 414), and Section 9 of Pretrial Order No. 7 (16-MD-

2724, ECF 121), the accompanying Memorandum of Law has been filed with redactions.

Dated: October 6, 2017 Respectfully submitted,

By: /s/ Sheron Korpus

Sheron Korpus

Seth A. Moskowitz

David M. Max

KASOWITZ BENSON TORRES LLP

1633 Broadway

New York, New York 10019

Tel: (212) 506-1700

Fax: (212) 506-1800

[email protected]

[email protected]

[email protected]

Counsel for Actavis Holdco U.S., Inc. and Actavis

Pharma, Inc.

/s/ Damon W. Suden

William A. Escobar Damon W. Suden KELLEY DRYE & WARREN LLP 101 Park Avenue New York, New York 10178 Tel: (212) 808-7800 Fax: (212) 808-7897 [email protected] [email protected]

Counsel for Defendants Wockhardt USA LLC and Morton Grove Pharmaceuticals Inc.

/s/ J. Douglas Baldridge

J. Douglas Baldridge

Lisa Jose Fales

Danielle R. Foley

Venable LLP

600 Massachusetts Avenue, NW

Washington, D.C. 20001


3

(202) 344-4000

[email protected]

[email protected]

[email protected]

Thomas J. Welling, Jr.

Benjamin P. Argyle

Venable LLP

1270 Avenue of the Americas, 24th Floor


(212) 307-5500

[email protected]

[email protected]

Attorneys for Defendant Taro Pharmaceuticals U.S.A.,

Inc.

/s/ Devora W. Allon

Jay P. Lefkowitz, P.C.

Devora W. Allon

KIRKLAND & ELLIS LLP

601 Lexington Avenue

New York, NY 10022-4611

Tel: (212) 446-4800

Fax: (212) 446-4900

[email protected]

[email protected]

Douglas J. Kurtenbach, P.C.

KIRKLAND & ELLIS LLP

600 North LaSalle

Chicago, IL 60654

Tel: (312) 862-2000

Fax: (312) 862-22000

[email protected]

Counsel for Defendants Akorn, Inc., Akorn Sales Inc.

and Hi-Tech Pharmacal Co., Inc.

/s/ Scott A. Stempel

Scott A. Stempel, Esq.

J. Clayton Everett, Jr., Esq.

Tracey F. Milich, Esq. (Pa. ID No. 316753)

MORGAN, LEWIS & BOCKIUS LLP

1111 Pennsylvania Avenue, NW

Washington, D.C. 20004


4

Phone: (202) 739-3000

Fax: (202) 739-3001

[email protected]

[email protected]

[email protected]

Harvey Bartle IV, Esq. (Pa. ID No. 91566)

Francis A. DeSimone, Esq. (Pa. ID No. 320837)

MORGAN, LEWIS & BOCKIUS LLP

1701 Market Street

Philadelphia, PA 19103

Phone: (215) 963-5000

Fax: (215) 963-5001

[email protected]

[email protected]

Counsel for Defendant Perrigo New York, Inc.

/s/ Saul P. Morgenstern

Saul P. Morgenstern

Margaret A. Rogers

Alice C.C. Huling

ARNOLD & PORTER KAYE SCHOLER LLP

250 West 55th Street


Tel: (212) 836-8000

Fax: (212) 836-8689

[email protected]

[email protected]

[email protected]

Laura S. Shores

ARNOLD & PORTER KAYE SCHOLER LLP

601 Massachusetts Avenue, NW

Washington, DC 20001

Tel: (202) 942-5000

Fax: (202) 942-5999

[email protected]

Abby L. Sacunas (200081)

Peter M. Ryan (81816)

COZEN O’CONNOR

1650 Market Street

Philadelphia, PA 19103

(215) 665-4785

(215) 701 2472 (fax)


5

[email protected]

[email protected]

Counsel for Defendants Sandoz Inc. and Fougera

Pharmaceuticals Inc.


IN THE UNITED STATES DISTRICT COURTFOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: GENERIC PHARMACEUTICALSPRICING ANTITRUST LITIGATION

MDL 272416-MD-2724HON. CYNTHIA M. RUFE



ALL END-PAYER ACTIONS 16-CB-27242

DEFENDANTS’ JOINT MEMORANDUM IN SUPPORT OF THEIR MOTION TO

DISMISS THE CONSOLIDATED END-PAYER CLASS ACTION COMPLAINT


TABLE OF CONTENTS

Page

-i-

INTRODUCTION.........................................................................................................................1

FACTUALBACKGROUND........................................................................................................3

A. Clobetasol..............................................................................................................3

B. TheParties.............................................................................................................3

C. EPPS’Claims.........................................................................................................4

ARGUMENT.................................................................................................................................5

I. FEDERALANTITRUSTCLAIMSMUSTBEDISMISSED..........................................5

A. EPPsDoNotPleadDirectEvidenceOfA Price-FixingConspiracy....................7

B. EPPs’CircumstantialEvidenceAllegationsAreInadequate................................7

1. EPPsFailToPleadParallelPricingConduct............................................8

2. EPPs’“PriceFixing”TheoryMakesNoEconomicSense......................12

3. EPPs’“PlusFactor”AllegationsAreDeficientAsA MatterOfLaw ..........................................................................................................13

II. EPPS’STATELAW CLAIMSMUSTBEDISMISSED FORTHESAMEREASONSASTHEFEDERALANTITRUSTCLAIM ................................................14

III. EPPSLACK STATUTORY STANDING TO ASSERTFEDERALORSTATELAW CLAIMS................................................................................................................15

IV. EPPSLACK ARTICLEIIISTANDING TO SUEUNDERTHELAW SOFJURISDICTIONSW HERENO NAMED PLAINTIFFW ASALLEGEDLYINJURED.........................................................................................................................20

V. EPPS’STATEANTITRUSTCLAIMSFAILFORSTATE-SPECIFICREASONS.......................................................................................................................21

A. TheEPPComplaintRunsAfoulOfRestrictionsInSeveralStatesOnIndirectPurchaserActions...................................................................................21

B. NoEPPIsA CitizenOrResidentOfUtah..........................................................22

C. EPPsFailToAllegeA SubstantialEffectOnIntrastateCommerce, AsRequiredToStateAnAntitrustClaim InSeveralStates.....................................22

VI. EPPS’CONSUMERPROTECTION CLAIMSFAIL....................................................23

A. IndirectPurchaserClaimsAreBarredInStatesThatHaveNotRepealedIllinois Brick.........................................................................................................25


TABLE OF CONTENTS(continued)

Page

-ii-

B. SeveralStates’ConsumerProtectionStatutesBarClassActions.......................26

C. SeveralConsumerProtectionStatutesAreInapplicableToAntitrustConduct................................................................................................................26

D. EPPsFailToMeetRule9(b)PleadingStandardForFloridaConsumerProtectionClaim ..................................................................................................27

E. EPPs’ClaimsAreTooRemoteToEstablishStandingUnderTheLawsOfArkansas, California, Florida, AndNorthCarolina.............................................27

F. EPPsFailToAllegeDeceptiveConductAsRequiredUnderTheConsumerProtectionLawsOfSeveralStates.....................................................28

G. NorthCarolinaAndW isconsinLaw RequireEPPsToAllegeRelianceOnA Misrepresentation.............................................................................................29

H. EPPsAllegeAnInsufficientIn-StateInjuryToMaintainA Claim UnderSeveralStates’ConsumerProtectionLaws.........................................................30

I. MassachusettsAndW estVirginiaRequireStatutoryNoticeAsAPrerequisiteToFilingSuit...................................................................................30

J. EPPs’MissouriAndVermontConsumerProtectionClaimsFailBecauseDefendantsDoNotSellDirectlyToConsumers.................................................31

K. EPPs’ConsumerFraudClaimsFailBecauseTheyAreNotConsumers............32

L. EPPsDoNotAllegeThatDefendantIsA SupplierAsRequiredByTheUtahConsumerSalesPracticesAct.....................................................................33

M. EPPs’ClaimsUnderNevadaLaw MustBeDismissedBecauseEPPsAreNotElderlyOrDisabledPersons.........................................................................33

N. BusinessesDoNotHaveStandingToBringA Claim UnderTheConsumerProtectionLaw OfMassachusetts......................................................34

VII. EPPS’UNJUSTENRICHMENTCLAIMSFAILASA MATTEROFLAW ..............34

A. EPPsCannotUseUnjustEnrichmentAsAn“EndRun”AroundIllinoisBrick.....................................................................................................................34

B. A NumberOfJurisdictionsAllow UnjustEnrichmentClaimsOnlyW hereEPPsConferredA DirectBenefitOnDefendants...............................................35

C. UnjustEnrichmentIsNotAnIndependentCauseOfActionInSomeStates....................................................................................................................36

D. TennesseeRequiresEPPsToPleadExhaustionOfRemedies............................37

E. SeveralStatesRequireEPPsToPleadThatTheyLackAnAdequateLegalRemedy................................................................................................................37


TABLE OF CONTENTS(continued)

Page

-iii-

F. EPPs’UnjustEnrichmentClaimsUnderIllinoisAndSouthCarolinaLawFailBecauseEPPsHaveNotAllegedA SpecialDutyOwedByDefendants...........................................................................................................38

G. EPPsMayNotAvoidAlabama’sIn-StateRequirementForAntitrustClaimsByBringingAnUnjustEnrichmentClaim .............................................38

VIII. MANY OFEPPS’STATELAW CLAIMSARETIME-BARRED...............................39

CONCLUSION............................................................................................................................40


i

TABLE OF AUTHORITIES

Page(s)

Cases

In re Aftermarket Filters Antitrust Litig.,MDLNo.1957, 2010W L1416259(N.D.Ill.Apr.1, 2010)..................................................35

In re Aggrenox Antitrust Litig.,94F.Supp.3d224(D.Conn.2015)..................................................................................22-23

In re Aggrenox Antitrust Litig.,No.3:14-md-2516, 2016W L4204478(D.Conn.Aug.9, 2016).........................24-25, 32, 34

In re Aluminum Warehousing Antitrust Litig.,No.13-md-2481, 2014W L4277510(S.D.N.Y.Aug.29, 2014)............................................18

Am. Towers Owners Ass’n Inc. v. CCI Mech. Inc.,930P.2d1182(Utah1996)......................................................................................................37

Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court,209P.3d937(Cal.2009).........................................................................................................28

In re Asacol Antitrust Litig.,No.15-cv-12730, 2016W L4083333(D.Mass.July20, 2016)...........................21, 25, 32, 34

Ashcroft v. Iqbal,556U.S.662(2009).................................................................................................1, 14-15, 24

Associated Gen. Contractors of California., Inc. v. California State Council ofCarpenters,459U.S.519(1983).........................................................................................................passim

In re Baby Food Antitrust Litig.,166F.3d112(3dCir.1999).......................................................................................8, 9, 10, 12

Bell Atlantic Corp. v. Twombly,550U.S.544(2007).........................................................................................................passim

Black v. JP Morgan Chase & Co.,No.CIV.A.10-848, 2011W L4102802(W .D.Pa.Aug.10, 2011)..........................................8

Bumpers v. Cmty. Bank of N. Va.,747S.E.2d220(N.C.2013).....................................................................................................29

Burtch v. Milberg Factors, Inc.,662F.3d212(3dCir.2011)...............................................................................................5, 6, 7


ii

Cannon v. Wells Fargo Bank, N.A.,926F.Supp.2d152(D.D.C.2013).........................................................................................32

In re Cast Iron Soil Pipe & Fittings Antitrust Litig.,No.1:14-md-2508, 2015W L5166014(E.D.Tenn.June24, 2015)...........................23, 32-33

Chavez v. Whirlpool Corp.,93Cal.App.4th363(Cal.Ct.App.2001)..............................................................................28

Chochorowski v. Home Depot U.S.A., Inc.,295S.W .3d194(Mo.Ct.App.2009)......................................................................................31

In re Chocolate Confectionary Antitrust Litig.,749F.Supp.2d224(M.D.Pa.2010)......................................................................................33

In re Chocolate Confectionary Antitrust Litig.,801F.3d383(3dCir.2015).....................................................................................................12

In re Chocolate Confectionary Antitrust Litig.,999F.Supp.2d777(M.D.Pa.2014), aff’d, 801F.3d383(3dCir.2015).........................9, 11

Cole v. Chevron USA, Inc.,554F.Supp.2d655(S.D.Miss.2007)...................................................................................36

Community Guardian Bank v. Hamlin,898P.2d1005(Ariz.Ct.App.1995).......................................................................................37

Crouch v. Crompton Corp.,No.02-CVS-4375, 2004W L2414027(N.C.Super.Ct.Oct.28, 2004).................................18

D.R. Ward. Const. Co. v. Rohm & Haas Co.,470F.Supp.2d485(E.D.Pa.2006).......................................................................................37

DaimlerChrysler Corp. v. Cuno,547U.S.332(2006).................................................................................................................20

In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig.,No.09-cv-3690, 2015W L3988488(N.D.Ill.June29, 2015)....................................25-26, 28

In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig.,No.09-cv-3690, 2013W L4506000(N.D.Ill.Aug.23, 2013)...............................................19

Dooner v. Yuen,No.16-1939, 2016W L6080814(D.Minn.Oct.17, 2016)....................................................38

In re Dynamic Random Access Memory (DRAM) Antitrust Litig.,516F.Supp.2d1072(N.D.Cal.2007)...........................................................................passim


iii

E. Elec. Corp. v. FERD Canst., Inc.,No.CIV.05CV303JD, 2005W L3447957(D.N.H.Dec.15, 2005).......................................37

In re Flonase Antitrust Litig.,692F.Supp.2d524(E.D.Pa.2010).................................................................................30, 35

Formula One Licensing, B.V. v. Purple Interactive Ltd.,No.C00-2222, 2001W L34792530(N.D.Cal.Feb.6, 2001).........................................24, 28

Fowler v. UPMC Shadyside,578F.3d203(3dCir.2009).......................................................................................................5

Frullo v. Landenberger,814N.E.2d1105(Mass.App.Ct.2004).................................................................................34

Furlough v. Spherion Atlantic Workforce, LLC,397S.W .3d114(Tenn.2013)..................................................................................................37

Gen. Insulation Co. v. Eckman Canst.,992A.2d613(N.H.2010).......................................................................................................36

In re Graphic Processing Units Antitrust Litig.,527F.Supp.2d1011(N.D.Cal.2007).......................................................................14, 26, 28

Hill v. Roll Int’l Corp.,128Cal.Rptr.3d109(Cal.Ct.App.2011).............................................................................36

HLD Enters., Inc. v. Michelin North Am., Inc.,No.Civ.A.1:03CV..................................................................................................................26

Illinois Brick Co. v. Illinois,431U.S.720(1977).........................................................................................................passim

In re Ins. Brokerage Antitrust Litig.,618F.3d300(3dCir.2010).................................................................................................8, 10

InterVest, Inc. v. Bloomberg, L.P.,340F.3d144(3dCir.2003).......................................................................................................7

Jones v. ConAgra Foods, Inc.,No.C12-01633, 2014W L2702726(N.D.Cal.June13, 2014).............................................29

Kelley v. Call. of St. Benedict,901F.Supp.2d1123(D.Minn.2012)....................................................................................37

Krug v. Am. Family Mut. Ins. Co.,227F.Supp.3d942(N.D.Ill.2016).......................................................................................36


iv

Lantec, Inc. v. Novell, Inc.,306F.3d1003(10thCir.2002)...............................................................................................15

In re Lidoderm Antitrust Litig.,103F.Supp.3d1155(N.D.Cal.2015)..................................................................25-26, 33-34

Loeb Indus. Inc. v. Sumitomo Corp.,306F.3d469(7thCir.2002)...................................................................................................18

In re Lower Lake Erie Iron Ore Antitrust Litig.,998F.2d1144(3dCir.1993)...................................................................................................16

Lum v. Bank of America,361F.3d217(3dCir.2004).....................................................................................................10

Martis v. Grinnell Mut. Reinsurance Co.,905N.E.2d920(Ill.App.Ct.2009)..................................................................................36, 38

Mayor and City Council of Baltimore, Md. v. Citigroup, Inc.,709F.3d129(2dCir.2013).......................................................................................................7

Melchior v. New Line Prods., Inc.,131Cal.Rptr.2d347(Cal.Ct.App.2003).............................................................................36

In re Microsoft Corp. Antitrust Litig.,401F.Supp.2d461(D.Md.2005).........................................................................................38

Monsanto Co. v. Spray-Rite Serv. Corp.,465U.S.752(1984)...................................................................................................................6

In re Musical Instruments & Equip. Antitrust Litig.,798F.3d1186(9thCir.2015).............................................................................................9, 13

N. Cheyenne Tribe v. Roman Catholic Churchex rel. Dioceses of Great Falls/Billings, 296P.3d450(Mont.2013).....................................37

In re New Motor Vehicles Canadian Exp. Antitrust Litig.,350F.Supp.2d160(D.Me.2004).............................................................................25, 33, 35

In re Nexium (Esomeprazole) Antitrust Litig.,968F.Supp.2d367(D.Mass.2013)......................................................................................22

In re Niaspan Antitrust Litig.,42F.Supp.3d735(E.D.Pa.2014).............................................................................20, 22, 36

Norman’s on the Waterfront, Inc. v. Wheatley,317F.Supp.247(D.V.I.1970).................................................................................................5


v

Oliver v. SD-3C LLC,No.11-cv-01260-JSW , 2016W L5950345(N.D.Cal.Sept.30, 2016)....................................9

In re Opana ER Antitrust Litig.,162F.Supp.3d704(N.D.Ill.2016).......................................................................................22

In re Opana Er Antitrust Litig.,MDLDocketNo.2580, CaseNo.14C10150, 2016W L4245516(N.D.Ill.Aug.11, 2016).........................................................................................................................35

In re Packaged Ice Antitrust Litig.,779F.Supp.2d642(E.D.Mich.2011)...................................................................................27

Parsons Infrastructure & Tech. Grp., Inc. v. Gilbane Bldg. Co.,No.05-CV-01-PB, 2005W L2978901(D.N.H.Nov.7, 2005)...............................................37

Philadelphia Indem. Ins. Co. v. Pace Suburban Bus Serv.,67N.E.3d556(Ill.App.Ct.2016)..........................................................................................38

Pitts v. Jackson Nat’l Life. Ins. Co., 574S.E.2d503(S.C.Ct.App.2002)..................................38

In re Potash Antitrust Litig.,667F.Supp.2d907(N.D.Ill.2009).................................................................................27, 35

In re Propranolol Antitrust Litig.,No.16-CV-09901(JSR), 2017W L1287515(S.D.N.Y.Apr.6, 2017)....................................8

In re Refrigerant Compressors Antitrust Litig.,No.2:09-MD-02042, 2013W L1431756(E.D.Mich.Apr.9, 2013)................................16, 27

Resco Prod., Inc. v. Bosai Mineral Grp. Co., Ltd.,158F.Supp.3d406(W .D.Pa.2016)........................................................................................9

Rick-Mik Enters. v. Equilon Enters., LLC,532F.3d963(9thCir.2008)...............................................................................................5, 15

Rindal v. Sohler,658N.W .2d769(S.D.2003)...................................................................................................37

Robinson v. Prison Health Servs., Inc.,No.CIV.A.10-cv-7165, 2014W L2452132(E.D.Pa.June2, 2014)....................................15

Samiento v. World Yacht Inc.,883N.E.2d990(N.Y.2008)....................................................................................................37

Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC,737F.Supp.2d380(E.D.Pa.2010)...............................................................................passim


vi

Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC,263F.R.D.205(E.D.Pa.2009)...............................................................................................36

Siti-Sites.com, Inc. v. Verizon Commc’ns, Inc.,No.10-cv-3751, 2010W L5392927(S.D.N.Y.Dec.29, 2010)..............................................18

Smith v. Ford Motor Co.,462F.App’x660(9thCir.2011)............................................................................................36

In re Solodyn (Mino Hydrochloride) Antitrust Litig.,No.14-md-02503, 2015W L5458570(D.MassSept.16, 2015).....................................31, 35

Southard v.Visa U.S.A. Inc.,734N.W .2d192(Iowa2007)..................................................................................................20

Southtown Plumbing, Inc. v. Har-Ned Lumber Co., Inc.,493N.W .2d137(Minn.1992).................................................................................................37

Spacesaver Corp. v. Marvel Grp., Inc.,621F.Supp.2d659(W .D.W is.2009)...................................................................................29

St. Clair v. Citizens Fin. Grp.,340F.App’x62(3dCir.2009)...............................................................................................14

Stanley v. Huntington Nat’l Bank,No.1:11CV54, 2012W L254135(N.D.W .VaJan.27, 2012), aff’d, 492F.App’x456(4thCir.2012).......................................................................................................31

In re Static Random Access Memory Antitrust Litig.,No.07-md-01819CW , 2010W L5094289(N.D.Cal.Dec.8, 2010).....................................25

Steamfitters Local Union No. 420 Welfare Fund v. Philip Morris, Inc.,171F.3d912(3dCir.1997)...............................................................................................17, 19

In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig.,64F.Supp.3d665(E.D.Pa.2014).......................................................................21, 25, 31, 35

Superior Offshore Int’l, Inc. v. Bristow Group, Inc.,490F.App’x492(3dCir.2012).............................................................................................13

Supreme Auto Transp. LLC v. Arcelor Mittal,238F.Supp.3d1032(N.D.Ill.2017).....................................................................................20

In re Target Corp. Customer Data Sec. Breach Litig.,66F.Supp.3d1154(D.Minn.2014)......................................................................................26

Taylor v. United Mgmt., Inc.,51F.Supp.2d1212(D.N.M.1999)........................................................................................28


vii

In re TFT-LCD (Flat Panel) Antitrust Litig.,586F.Supp.2d1109(N.D.Cal.2008)...................................................................................26

In re TFT-LCD (Flat Panel) Antitrust Litig.,599F.Supp.2d1179(N.D.Cal.2009).............................................................................25, 35

United Food & Commer. Workers Local 1776 & Participating Employers Health& Welfare Fund v. Teikoku Pharma USA, Inc.,74F.Supp.3d1052(N.D.Cal.2014)...............................................................................32, 34

Valspar Corp. v. E.I. Du Pont de Nemours & Co.,No.16-1345, __F.3d__, 2017W L4364317(3dCir.Sept.14, 2017)...............................9, 13

Vista Healthplan, Inc. v. Cephalon, Inc.,No.2:06-cv-1833, 2015W L3623005(E.D.Pa.June10, 2015).............................................17

In re Wellbutrin XL Antitrust Litig.,260F.R.D.143(E.D.Pa.2009)...............................................................................................33

In re WellPoint, Inc. Out-Of-Network “UCR” Rates Litig.,903F.Supp.2d880(N.D.Cal.2012).....................................................................................32

WrestleReunion, LLC v. Live Nation Television Holdings, Inc.,No.8:07-cv-2093-JDW -MSS, 2008W L3048859(M.D.Fla.Aug.4, 2008).........................27

Zine v. Chrysler Corp.,600N.W .2d384(Mich.App.1999)........................................................................................32

Statutes

15U.S.C.§1................................................................................................................................5-6

15U.S.C.§3....................................................................................................................................5

740Ill.Comp.Stat.§10/7(2)...................................................................................................19, 21

AlaskaStat.§45.50.577(1)............................................................................................................26

Ariz.Rev.Stat.§44-1415(A)........................................................................................................21

Ark.Code§4-88-107(a)................................................................................................................26

Colo.Rev.Stat§6-1-115..............................................................................................................39

D.C.Code§28-3901(a)(2)(B)(i)...................................................................................................32

Fed.R.Civ.P.9(b) .......................................................................................................................27


viii

FlaStat.§501.204.........................................................................................................................27

Haw.Rev.Stat.§480-1.................................................................................................................32

Haw.Rev.Stat.§480-13.3............................................................................................................21

Mass.Gen.Lawsch.93A §9..................................................................................................20, 34

Mass.Gen.Lawsch.93A §11......................................................................................................34

Minn.Stat.§325D.57....................................................................................................................19

Mo.Rev.Stat.§407.025(1)...........................................................................................................32

Mont.Code§30-14-102(1) ..........................................................................................................32

Mont.Code§30-14-133(a)...........................................................................................................26

Nev.Rev.Stat.§598A.210...........................................................................................................21

Nev.Rev.Stat.§598.170..............................................................................................................32

Nev.Rev.Stat.§§598.0903-598.0999..........................................................................................33

N.M.Stat§57-12-2(D)..................................................................................................................26

N.M.Stat.§57-1-3(C)...................................................................................................................19

N.Y.Gen.Bus.Law §340(6)........................................................................................................19

Or.Rev.Stat.§646.775(1)(b)(A)..................................................................................................19

R.I.Gen.Laws§6-13.1-5.2(a)......................................................................................................32

41S.D.Cod.Laws§37-1-3319....................................................................................................19

UtahCode§76-10-3109(9)...........................................................................................................21

UtahCode§§13-11-3(6), 4(1), (5)(1)...........................................................................................33

W .Va.Code§46A-6-106(c).........................................................................................................31

W .Va.Code§46A-6-102(2)........................................................................................................32

VTStat.Tit.9§2451(a)..................................................................................................................3

Vt.Stat.Tit.9§2465(b)................................................................................................................19


ix

Other Authorities

Fed.R.Civ.P.8.............................................................................................................................23

Fed.R.Civ.P.9(b)........................................................................................................................27

Fed.R.Civ.P.23...........................................................................................................................22

U.S.Const.ArticleIII....................................................................................................................20


1

INTRODUCTION

TheEnd-PayerPlaintiffs(“EPPs”)–healthbenefitfundsandmanagersorprovidersof

employeehealthbenefitsthatpurportedlyreimbursedmembers’Clobetasolpurchases–bring

federalandanastonishing106statelaw claimsbasedonthreadbareallegationsaboutafacially

implausibleClobetasolprice-fixingconspiracy.Forallitsbulk, theConsolidatedEnd-Payer

ClassActionComplaint(the“EPPComplaint”or“EPPCompl.”)failstoprovidesufficientwell-

pledfactstomeetthepleadingstandardssetforthinBell Atlantic Corp. v. Twombly, 550U.S.

544(2007), andAshcroft v. Iqbal, 556U.S.662(2009), aswellasThirdCircuitprecedent.This

failurealonedoomsEPPs’claimsintheirentirety, bothfederalandstate.

EPPs’federalantitrustclaimspresentthesamedefectsastheDirectPurchaserPlaintiffs’

(the“DPPs”)claims.Unabletoallegeanydirectevidenceofconspiracy, EPPsmerelysupply

conclusoryandirrelevantallegationsthatDefendantsparticipatedinroutinetradeshowsand

industryevents.Theseallegationsareplainlyinsufficienttosurviveamotiontodismiss.

IndependentofTwombly anditsprogeny, theEPPComplaintsuffersfrom additional

deficiencieswhichrequiredismissaloftheirstatelaw claimstobedismissedasamatteroflaw.

Attheoutset, EPPslackantitruststandingbecause, asthirdpartypayers, theiralleged

injuryissoremoteandattenuatedfrom theallegedantitrustconspiracythattheylackstandingto

sue, especiallyastherearepartiesinthislitigationallegingmoredirectinjuries.EPPscannot

show thattheyareefficientenforcersoftheirstatelaw antitrustclaims.Additionally, certain

stateclaimsfailforlackofConstitutionalstanding, sincenoneoftheEPPsresidein, orare

allegedtohavepurchasedorreimbursedpurchasesofClobetasolin, thosejurisdictions.

Beyondthesedeficiencies, EPPsdonotsatisfythestatutoryandcommonlaw

requirementsofthevariousstatecausesofactiontheyassert.


2

EPPs’stateantitrustclaimsalsofailfornumerousindependentreasons:insomecases,

theyhaveignoredrestrictionsonstatelaw indirectpurchaseractions;inothers, theyhavefailed

toallegeinanythingmorethantransparentlyconclusoryfashionintrastateconductora

substantialeffectonintrastatecommerce.

NordoEPPs’31claimsunderstateconsumerprotectionlawsfareanybetter.For

example, inthemanystatesthathavepreservedthefederalbanonindirectpurchaserdamages

actions, consumerprotectionclaimsthataresimply“repackaged”antitrustclaimsareprohibited.

Inotherstates, simpleallegationsofcollusivepriceincreasesareinsufficienttostateaconsumer

protectionlaw claim.Moreover, giventhathealthcarefundsarenotconsumers, EPPsare

ineligibletosueunderseveralstates’consumerprotectionstatutes.

Finally, employingthemostscattershotapproachtopleadingimaginable, EPPsbring

unjustenrichmentclaimsinnofewerthan51jurisdictions.Someofthosejurisdictionsdonot

evenrecognizeunjustenrichmentasacauseofaction;othersbanunjustenrichmentclaimslike

theonespledherethataremerelyattemptstoavoidtheIllinois Brick rule;othersrequireadirect

relationshipbetweenplaintiffanddefendant, oraspecialdutyowedbydefendant;stillothers

requirethattheplaintiffshow thatithasexhaustedallotherpotentialremedies.EPPscomply

withnone oftheserequirements.

Forthereasonssetoutbelow andintheaccompanyingappendices–andthosesetoutin

theDefendants’Memorandum ofLaw inSupportofJointMotiontoDismisstheConsolidated

DirectPurchaserClassActionComplaint(“DPPMTD”)andDefendants’Memorandum ofLaw

inSupportofJointMotiontoDismisstheIndirectResellerPlaintiffs’ConsolidatedClassAction

Complaint(“IRPMTD”), whichareincorporatedbyreferencehere–Defendantsrespectfully

requestthattheCourtdismisstheEPPComplaint,withprejudice, initsentirety.


3

FACTUAL BACKGROUND

A. Clobetasol

AccordingtotheEPPComplaint, Clobetasolpropionateisa“highpotencytopical

corticosteroidusedforthetreatmentofavarietyofskinconditions, includingeczema, dermatitis,

psoriasis, andvitiligo.”(EPPCompl.¶2.) TheproductsatissueintheEPPComplaintarethe

genericequivalentsofthebrand-namedrugTemovate;genericClobetasolhasbeenavailable

sincethemid-1990s.(Id. ¶¶88-89.)

ThevariantsofClobetasolpropionateatissuearetopicalcream 0.05% (in15, 30, 45and

60gram tubes), topicalemollientcream 0.05% (in15, 30and60gram tubes), topicalointment

0.05% (in15, 30, 45and60gram tubes), topicalgel0.05% (in15, 30and60gram tubes), and

topicalsolution0.05% (in15or50mlbottles)(collectively, “Clobetasol”).(Id.¶2.)

B. The Parties

EPPsare:1199SEIU NationalBenefitFund, 1199SEIU GreaterNew YorkBenefitFund,

1199SEIU NationalBenefitFundforHomeCareW orkers, and1199SEIU LicensedPractical

NursesW elfareFund(collectively, “1199SEIU BenefitFunds”);AmericanFederationofState,

CountyandMunicipalEmployeesDistrictCouncil37Health& SecurityPlan(“DC37”);

HennepinCounty, Minnesota;LouisianaHealthService& IndemnityCompanyd/b/aBlueCross

andBlueShieldofLouisianaandHMO Louisiana, Inc.(collectively, “BCBS-LA”);Self-Insured

SchoolsofCalifornia(“SISC”);SergeantsBenevolentAssociationofthePoliceDepartmentof

theCityofNew YorkHealthandW elfareFund(SBA Fund);UniformedFireOfficers

AssociationFamilyProtectionPlanLocal854(“UFOAFPP”);andUniteHereHealth.(See id.

¶¶37-44.) ThesenamedEPPsare(a)employeewelfarebenefitsfundsand/ormanagersand(b)

providersofemployeewelfarebenefitswhoclaim tohavepurchased, paidfor, and/or

reimbursedtheirmembersforpurchasesofClobetasolduringtheallegedclassperiod.(Id.)


4

DefendantsActavisHoldcoU.S., Inc.andActavisPharma, Inc.(together, “Actavis”);

Akorn, Inc., AkornSales, Inc.andHi-TechPharmaceuticalCo., Inc.(together, “Akorn”);

PerrigoNew York, Inc.(“Perrigo”);Sandoz, Inc.andFougeraPharmaceuticals, Inc.(together,

“Sandoz”);TaroPharmaceuticalsU.S.A., Inc.(“Taro”)andW ockhardtUSA LLCandMorton

GrovePharmaceuticals, Inc.(together, “W ockhardt”)(collectively, “Defendants”)are

pharmaceuticalcompanies.AccordingtotheEPPComplaint, Akorn, Perrigo, Sandoz, Taro, and

W ockhardtwereallmanufacturersofatleastoneoftheformsofClobetasolthroughoutthe

periodatissueinthislitigation.(Id. ¶¶94-98.) Actavis, whichhadpreviouslyonlyhad“de

minimissalesofsomeClobetasolformulationspriortoandduringtheinitialpriceincreases,

begansellingcream inMarch2015andincreaseditssalesofsolutioninAugust2015.”(Id. ¶

89.)

C. EPPs’ Claims

EPPspurporttorepresentanationwideclassofpersonswho“indirectlypurchased, paid

and/orprovidedreimbursementforsomeorallofthepurchasepriceforDefendants’Clobetasol

products...otherthanforresale, from June2014throughthepresent.” (Id. ¶230.) EPPsalso

purporttorepresentadamagesclassofpurchasersofthesameproducts, overthesameperiod, in

48states, aswellastheDistrictofColumbia, PuertoRicoandtheU.S.VirginIslands.(Id. ¶

231.)

EPPsclaim thatthepricesofvariousClobetasolformulationsincreasedduetounlawful

pricefixingagreements, marketandcustomerallocation, andbidriggingamongthe

manufacturersofgenericClobetasol.(Id. ¶¶116, 119, 121.) EPPsdonotallegeanydirect

evidencesufficienttoestablishthattheseallegedpriceincreasesweretheresultofanactual

agreementamongtheDefendants.Instead, theyrelyongeneralandvagueallegationsof

circumstantialevidence.


5

EPPsseekinjunctivereliefunderSections1and3oftheShermanAct1(FirstCount)(see

id. ¶¶240-49);damagesunderthelawsof26statesandtheDistrictofColumbia(SecondCount)

(see id. ¶¶250-85);damagesundertheconsumerprotectionstatutesof29states, theDistrictof

Columbia, andtheU.S.VirginIslands(ThirdCount)(see id. ¶¶286-318);anddisgorgement

undertheunjustenrichmentlawsof48states(allexceptforOhioandIndiana), theDistrictof

Columbia, PuertoRico, andtheU.S.VirginIslands(FourthCount)(see id. ¶¶319-89).

ARGUMENT

ForthesamereasonssetforthintheDPPMTD andIRPMTD, EPPshavefailedto

adequatelypleadfactssupportingareasonableinferenceofcoordinatedconductsufficientto

stateanentitlementtoreliefundertheShermanAct.See Rick-Mik Enters. v. Equilon Enters.,

LLC, 532F.3d963, 976n.5(9thCir.2008)(“[S]tatelaw antitrustclaimsarederivativeofthe

federallaw claims.Becausethefederalclaimsfail, thestatelaw claimsfail.”).ButevenifDPPs

orIndirectResellerPlaintiffs(“IRPs”)hadaclaim (andtheydonot), EPPs’statelaw antitrust,

consumerprotection, andunjustenrichmentclaimswouldstillfailforaplethoraofindividual

reasons.A summaryoftheseindependentbasesfordismissalappearsinAppendixA.2

I. FEDERAL ANTITRUST CLAIMS MUST BE DISMISSED

A districtcourt’sfirststeponamotiontodismissistoseparatethefactualwheat(which

isentitledtoanassumptionoftruth)from theconclusorychaff(whichisnot).See, e.g., Burtch

v. Milberg Factors, Inc., 662F.3d212, 225(3dCir.2011);see also Fowler v. UPMC Shadyside,

578F.3d203, 210-11(3dCir.2009).Oncethisisdone, thecourtmustthenassesswhetherthe

1 EPPsalsoasserttheirclaim pursuantto15U.S.C.§3.Section3extends§1’santitrustprohibitiontoU.S.territoriesandtheDistrictofColumbiabutdoesnototherwiseimpacttheantitrustanalysisinthismemorandum.See Norman’s on the Waterfront, Inc. v. Wheatley, 317F.Supp.247,250(D.V.I.1970).Forthisreason, DefendantshereinrefertoallofEPPs’ShermanActclaimsas§1claims.

2 Referencesto“Appendix__”aretotheappendicesattachedhereasExhibit1.


6

well-pleadedfactualallegationsstateaplausibleclaim forrelief.See Burtch, 662F.3dat220-

21.Here, itisapparentthatEPPs’putative“customerallocation”and“bidrigging”allegations

arebasedonnothingbutchaff.Thoughitspansover180pages, theEPPComplaintdoesnot

containasinglefactual allegationconcerninganysuchconduct.Infact, notonlydoestheEPP

ComplaintlackanydetailsaboutapurportedagreementamongDefendants(whoparticipated,

whentheagreementwasreached, etc.), itfailseventoindicatewhichcustomers(andwhose)

Defendantssupposedlyallocatedorwhichbids(andforwhat)Defendantssupposedlyrigged.In

short, EPPs’allegationsaresothreadbarethatitisnotclearevenwhatunlawfulconduct

Defendantsareaccusedofhavingcommitted.Thus, totheextenttheEPPComplaintpurportsto

assertper se ShermanActclaimsbasedonbidriggingandcustomerallocation, thoseclaims

mustbedismissedwithprejudicebecauseEPPshavefailedtopleadanintelligible–letalone

plausible–claim forrelief.

Tostateaprice-fixingclaim under§1oftheShermanAct, aplaintiffmustallegefacts

supportingaplausibleinferencethatdefendantsenteredintoanunlawfulagreementtofixprices.

See Twombly, 550U.S.at556-57.Topleadtheexistenceofsuchanunlawfulagreement, a

plaintiffmustallegeeither(1)“directevidence”oftheagreement, or(2)sufficientparallel

conductand“circumstantialevidencethatreasonablytendstoprovethatthe[defendants]hada

consciouscommitmenttoacommonscheme.” Monsanto Co. v. Spray-Rite Serv. Corp., 465

U.S.752, 764(1984)(internalquotationsandcitationomitted).Here, theEPPsdoneither.

Indeed, theEPPComplaintisbasedonthesamebasicallegationsastheConsolidated

DirectPurchaserClassActionComplaint(“DPPCompl.”):(1)allegedincreasesinthepricesof

variousClobetasolpresentations;(2)participationintradeassociationsandcustomermeetings;

(3)increasedrevenueandprofitsallegedlyaccruingtoDefendants;(4)marketcharacteristics


7

thatareallegedlyconducivetocollusion;(5)statementsmadeduringpublicearningscalls;and

(6)theexistenceofgovernmentinvestigationsandotherlitigationrelatingtovariousgeneric

pharmaceuticals.(Compare DPPCompl.¶¶8-13, 72, 118-36, 144-74, 206-08;EPPCompl.¶¶

15-31, 92-93, 118-52, 165-205.) Therefore, Defendantsincorporatebyreferencethearguments

containedinDefendants’DPPMTD andIRPMTD.Asdetailedinthosememorandaoflaw, and

forthereasonssetforthbelow, theseallegationsfailtosupportaplausibleinferencethat

Defendantsconspiredunlawfullytorestraintrade.

A. EPPs Do Not Plead Direct Evidence Of A Price-Fixing Conspiracy

“Directevidenceofaconspiracyisevidencethatisexplicitandrequiresnoinferencesto

establishthepropositionorconclusionbeingasserted.” Burtch, 662F.3dat225(internal

quotationsandcitationomitted).The“paradigmaticexample”ofsuchevidenceisa“recorded

phonecall”featuringanagreementtofixprices.Mayor and City Council of Baltimore, Md. v.

Citigroup, Inc., 709F.3d129, 136(2dCir.2013);see also InterVest, Inc. v. Bloomberg, L.P.,

340F.3d144, 162-63(3dCir.2003)(providingexamplesofdirectevidencesuchas“a

memorandum producedbyadefendantconspiratordetailingthediscussionsfrom ameetingofa

groupofallegedconspirators”).Bycontrast, evidencethatisvagueorrequirestheuseof“ample

inferences”toestablishconcertedactionisinsufficient.InterVest, 340F.3dat163.

TheEPPComplaintcontainsabsolutelynothingthat, ifproven, wouldqualifyas“direct

evidence”underBurtch.EPPsareunable(anddonotevenattempt)toallegeasinglemeetingor

conversationinwhichanyDefendantssomuchasmentionedthepricesofClobetasol, letalone

anyrecordingordocumentaryevidencetothateffect.(See DPPMTD at7-9.)

B. EPPs’ Circumstantial Evidence Allegations Are Inadequate

Unabletoallegeanydirectevidenceofaconspiracy, notonlymustEPPssetforth

allegationsshowingthatDefendantsactedinparallel, buttheymustalsoallegesufficient


8

circumstantialevidence–or“plusfactors”–supportingareasonableinferencethattheparallel

conductwasmorelikelytheresultofanunlawfulagreementratherthanlawfulindependent

behavior.See Twombly, 550U.S.at557(allegationsmust“raise[]asuggestionofapreceding

agreement, notmerelyparallelconductthatcouldjustaswellbeindependentaction”);Black v.

JP Morgan Chase & Co., No.CIV.A.10-848, 2011W L4102802, at*14(W .D.Pa.Aug.10,

2011)(ifa“plaintiffintendstoprove[its]§1claim basedoncircumstantialevidenceofparallel

conduct,”itmustnotonlypleadparallelconductbutmust“alsopleadplusfactors”(citingIn re

Ins. Brokerage Antitrust Litig., 618F.3d300, 323-24(3dCir.2010)).

EPPs’circumstantialevidencepleadingsarefatallydeficientonbothcounts.Asa

thresholdmatter, theComplaint’spricingallegationsareactuallyinconsistent withparallel

conduct.Buteveniftheydidsupportaninferenceofparallelism, EPPs’“plusfactor”allegations

would, atmost, supportaninferencethatDefendantsactedinaccordancewithconscious

parallelism ormarketinterdependence.Thatisnotenough.See Twombly, 550U.S.at557n.4

(requiringallegationsofparallelconductthat“wouldprobablynotresultfrom chance,

coincidence, independentresponsestocommonstimuli, ormereinterdependenceunaidedbyan

advanceunderstandingamongtheparties”).(See also DPPMTD at9-24.)

1. EPPs Fail To Plead Parallel Conduct

TheEPPComplaintfailstoclearthefirsthurdleofthecircumstantialevidencetest:it

doesnotevenallegeparallelconductonthepartofDefendants.

AstheThirdCircuithasexplained, parallelism doesnotexistwheretheraised“prices

wereneitheruniform norwithinanyagreeduponpricerangeofeachother.” In re Baby Food

Antitrust Litig., 166F.3d112, 132(3dCir.1999)(hereinafter“In re Baby Food”).3 Although

3 InIn re Propranolol Antitrust Litig., No.16-CV-09901(JSR), 2017W L1287515at*5(S.D.N.Y.Apr.6, 2017),JudgeRakoffexplicitlyrefusedtoapplytheholdingofIn re Baby Food, inpart,becausetheThirdCircuitdecision


9

pricingdecisionsdonotneedtobe“absolutelyuniform,”tocountasparalleltheymustatleast

be“reasonablyproximateintimeandvalue.” In re Chocolate Confectionary Antitrust Litig.,

999F.Supp.2d777, 787(M.D.Pa.2014), aff’d, 801F.3d383(3dCir.2015).

Inanattempttomakesuchashowing, EPPsrelyonthreetypesofpricingdata:asurvey

ofthe“NationalAverageDrugAdministrationCost”(“NADAC”);summariesof“W holesale

AcquisitionCost”(“W AC”);and“NationalSalesPerspective”(“NSP”)datafrom acompany

calledQuintilesIMS.(EPPCompl.¶¶75-77& n.44.)

NADAC“isasimpleaverageofthedrugacquisitioncostssubmittedbyretail

pharmacies”andsimplyprovidesanapproximateway“totrackgeneralpricetrendsinthe

marketplace.”(Id. ¶75.) Inotherwords, NADACdoesnotindicatethepriceschargedbyany

individualseller, orsayanythingaboutthetimingofanyincreases.Assuch, itisirrelevantto

the“parallelism”inquiry–i.e., itcannotpossiblysupportaninferencethatDefendants’price

increasesweretheproductofparallel(letalonecollusive)conduct.CourtsintheThirdCircuit

andelsewherehaverepeatedlyrecognizedthiscommon-sensepoint.See, e.g., In re Baby Food,

166F.3dat129(theCourtdoes“notbelievethattrendlinesofaveragepricesareareliable

indicatoroftransactionalprices.”).4

was“notbinding”intheSouthernDistrictofNew York.Ofcourse, here, thedecisionisbinding.See ValsparCorp. v. E.I. Du Pont de Nemours & Co., No.16-1345,__F.3d__,2017W L4364317, at*11(3dCir.Sept.14,2017)(rejectingasflawedplaintiff’sargumentthattheDelawareDistrictCourtshouldhavefollowedthereasoningandreachedthesameconclusionasdidtheMarylandDistrictCourt:“[T]heDistrictofMarylandsitswithinthe…FourthCircuit.Thus, theMarylandDistrictCourthadnoobligationtoconsiderThirdCircuitprecedent, butthe[Delaware]DistrictCourtwasboundbyit.”).

4 See also Resco Prod., Inc. v. Bosai Mineral Grp. Co., Ltd.,158F.Supp.3d406,424(W .D.Pa.2016)(holdingplaintifffailedtodemonstrateparallelpricingwhereitassertedmerelythatdefendants’prices“doubledduring2003and2004andincreasedanadditional70[percent]between2004and2007”becausegeneralpricemovementscouldnotdemonstrateparallelincreasesabsentevidence“oftheamountortimingofanyofthepriceincreasesitclaim[ed]weretheproductofcollusion”);In re Musical Instruments & Equip. Antitrust Litig., 798F.3d1186,1197(9thCir.2015)(affirmingdismissalbecauseaveragepricesdidnotdemonstratewhetherpriceschargedbydefendantsactuallyincreased);Oliver v. SD-3C LLC, No.11-cv-01260-JSW , 2016W L5950345, at*5-7(N.D.Cal.Sept.30,2016)(dismissingamendedcomplaintandrejectinguseofpricechartstoestablishparallelconduct).


10

EPPs’relianceonW ACpricesissimilarlyunavailing.W ACfiguresarebasedonthe

catalogorlistpricethatmanufacturersprovidetowholesalers.(See EPPCompl.¶77.) AsEPPs

acknowledge, W ACprices“arenotactualtransactionprices;rather, theyarethemanufacturer’s

reportedlistprice.Accordingly, W ACpricesdonottakeintoaccountdiscountsthatmaybe

provided, e.g., forvolumesales.”(Id. at¶76.) Thesepricesthusbearminimal, ifany,

relationshiptothepricescustomers–anda fortiori, endpayersseveralstepsdowntheline–

actuallypay.Anantitrustplaintiffcannotrelyonallegationsofagreementstoraise“listprices”

whenthefinalpricesactuallypaidbyconsumersareaffectedbyexternalfactorsandthird

parties.See Lum v. Bank of America, 361F.3d217, 232(3dCir.2004), abrogation on other

grounds recognized by In re Ins. Brokerage Antitrust Litig., 618F.3d300,323n.22(3dCir.

2010)(dismissingcasewithprejudice;“BoththeSupremeCourtandthisCourt[haveheld]that

therelevantinquiryforpurposesofdeterminingifanagreementtoinflatepricescanbeinferred

from consciouslyparallelpricingiswhetherthereisconsciouslyparallelpricingin the final price

consumers pay, notwhetherthereisconsciousparallelism inthelistpricefrom which

negotiationsforthefinalpricebegins.”)(emphasisadded);In re Baby Food, 166F.3dat128

(“chartsandreportsfocusingonlistpricesratherthantransactionalpriceshavelittlevalue”).

Undercontrollingprecedent, therefore, EPPs’W AC-relatedallegationscannotsupporta

plausibleclaim forrelief.

Nor, finally, canchartsbasedontheNSPpricingdatafrom QuintilesIMSsupportEPPs’

parallelpricingallegations.AsDefendantsexplainedintheDPPMTD, whilePlaintiffsmay

characterizetheirNSPdataas“measuringsalesatactualtransactionprices”(EPPCompl.¶76

n.44), theyneglecttomentionthatthedata’spublisher, QuintilesIMS, hasexpresslycautioned

thatthisdatadoes“notreflectoff-invoicepriceconcessionsthatreducethenetamountreceived






MDL 2724

16-MD-2724





16-CB-27242

[PROPOSED] ORDER

AND NOW, this day of , 2018, upon consideration of Defendants’

Joint Motion to Dismiss The Consolidated End-Payer Class Action Complaint pursuant to Federal

Rule of Civil Procedure 12(b)(6), and any responses or replies thereto, it is hereby ORDERED

that the Joint Motion to Dismiss is GRANTED. The Consolidated End-Payer Class Action

Complaint is DISMISSED WITH PREJUDICE in its entirety.

BY THE COURT:

The Honorable Cynthia M. Rufe, J.


11

bymanufacturers.” (See DPPMTD at13-16.) Forsomereason(perhapsinanefforttoconceal

how muchtheycontradicttheEPPs’case), theEPPComplaintdoesnotincludeanyactualNSP

numbers, butratherchartsconstitutingaroughgraphicalrepresentationofNSPpricingpatterns.

Thosecharts, nonetheless, aresufficienttoshow how theNSPpricingdatacontradicts, rather

thansupports, EPPs’claim.

Indeed, farfrom showingpriceincreasesthatwere“reasonablyproximateintimeand

value,”In re Chocolate Confectionary, 999F.Supp.2dat787, theNSPdatacitedintheEPP

Complaintshowsjusthow disparateandnon-parallel theallegedpriceincreaseswere, bothin

timeand value.Suchheterogeneitypowerfullydemonstratehow farEPPshavefallenshortof

meetingtheirpleadingburden.Forexample, theEPPComplaintincludesagraphpurportingto

setouttheNSPpricesfor“ClobetasolCream”duringtherelevanttimeperiod.(EPPCompl.¶

98.)

ThesameistruewithrespecttoEPPs’othergraphic

presentations:

.(Id.)

(Id.;see also DPPMTD at10-13.)

In re Chocolate Confectionary, 999F.Supp.2dat787,


12

2. EPPs’ “Price Fixing” Theory Makes No Economic Sense

TheThirdCircuithasrepeatedlyheldthat, ina§1casebasedonparallelconduct, “the

acceptableinferenceswhich[canbedrawn]from circumstantialevidencevarywiththe

plausibilityof[EEPs’]theoryandthedangerassociatedwithsuchinferences.” In re Baby Food,

166F.3dat124;see also Petruzzi’s, 998F.2dat1232(same).Iftheprofferedtheoryof

collusion“makesnoeconomicsense...theplaintiffmustproducemorepersuasiveevidenceto

supportitsclaim.” In re Chocolate Confectionary Antitrust Litig., 801F.3d383, 396(3dCir.

2015)(internalquotationmarksomitted).

Here, theprice-fixingconspiracyallegedintheEPPComplaintisfundamentally

implausible.EPPsallegethatbecauseDefendants’genericClobetasolproductsare

therapeuticallyequivalentandthushighlyinterchangeable(EPPCompl.¶¶5, 176), “purchasers

choosewhoseClobetasoltobuybasedprimarilyonprice,”suchthataunilateralpriceincrease

byoneDefendantwould“resultinalossofmarketshare.”(Id. at¶6).EPPscontendthat

Defendantsenteredintotheputativeprice-fixingconspiracyinordertoeliminatethisriskof

competition.(See id. ¶¶94, 109.) Yetasdiscussedabove(supra 11), EPPs’ownallegations

show thattherewasasubstantialvariationinDefendants’pricesforthesamegenericClobetasol

formulation/format.Thus, underEPPs’owntheory, Defendants’“price-fixing”conspiracy

wouldbeself-defeating, sinceconsumerscouldswitchfrom ahigher-pricedproduct

manufacturedbyoneDefendanttoalower-priced, therapeuticallyidenticalproduct

manufacturedbyanother.Farfrom reducingvariationsamongDefendants’Clobetasolproducts

tomitigatethethreatofpricecompetition, thepurported“collusive”pricingbehaviorallegedin

theComplaintwouldhaveservedonlytoamplify thosevariations, thereby(underEPPs’own

logic)increasingtheprospectofcompetition.(See also DPPMTD at11-13;IRPMTD at17-

19.)


13

3. EPPs’ “Plus Factor” Allegations Are Deficient As A Matter Of Law

EveniftheEPPComplainthadsufficientlyallegedparallelpriceincreasesforClobetasol

(andithasnot), withoutsufficientallegationsof“plusfactors,”acomplaintstill“stopsshortof

thelinebetweenpossibilityandplausibility.” Twombly, 550U.S.at557;see also In re Musical

Instruments, 798F.3dat1194(citingTwombly andholdingplaintiffmustallegefactual

allegationsthatare“largelyinconsistentwithunilateralconduct[and]largelyconsistentwith

explicitlycoordinatedaction”).

AssetoutmorefullyintheDPPMTD (at16-19), theThirdCircuithasidentifiedthree

potentiallyrelevantplusfactors:“(1)evidencethatthedefendanthadamotivetoenterintoa

pricefixingconspiracy;(2)evidencethatthedefendantactedcontrarytoitsinterests;and(3)

evidenceimplyingatraditionalconspiracy.” Valspar, 2017W L4364317, at*4(internal

quotationmarksomitted).

Thefirsttwo“economic”plusfactors, however, “arenotespeciallyhelpfulinprice-

fixingcaseswherethereare[alleged]parallelpriceincreasesbycompetitorsinaconcentrated

market,”Superior Offshore Int’l, Inc. v. Bristow Group, Inc., 490F.App’x492, 499(3dCir.

2012), becausethey“largelyrestatethephenomenonofinterdependence,”Valspar, 2017W L

4364317, at*4(internalquotationmarksomitted).ThatisexactlywhatEPPsallegehere.(See

EPPCompl.¶¶176(characterizingthemarketashaving“highdegreeofindustry

concentration”), 182(“DefendantshaveoligopolisticmarketpoweroverClobetasol.”).) Inany

event, thefactsallegedbyEPPsinfavorofthese“economicplusfactors”aredeficientforthe

samereasonsthattheessentiallyidenticalfactsallegedbytheDPPsfailtomakeitmorelikely


14

thannotthattheallegedpriceincreasesweretheresultofcollusionratherthanmere

interdependence.5 (See DPPMTD 17-18.)

Astothethirdplusfactor, thegroundsonwhichEPPsattempttopleadcircumstantial

evidenceofa“traditionalconspiracy”aresubstantiallyidentical(insomecases, verbatim)to

thosereliedonintheDPPComplaint, including:theexistenceoffederalandstategovernmental

investigations, andlitigationbroughtbystateattorneysgeneral(EPPCompl.¶¶15-31);the

purportedopportunitiestoconspireprovidedbytradeassociationmeetingsandindustryevents

(see id. ¶¶121-159);andstatementsmadebyDefendantsinearningcallsandotherinvestor

communications(see id. ¶¶160-74).Thosegroundsfailforthesamereasonsdetailedinthe

DPPMTD (at19-24.)

II. EPPS’ STATE LAW CLAIMS MUST BE DISMISSED FORTHE SAME REASONS AS THE FEDERAL ANTITRUST CLAIM

EPPs’stateantitrust, consumerprotection, andunjustenrichmentclaimsalsomustbe

dismissedforthesamereasonastheirShermanActclaim:therearenowell-pledallegations

plausiblysuggestingthatDefendantsconspiredtofixthepricesof(muchless“allocate

customers”or“rigbids”for)Clobetasol.Stateclaimsbroughtinfederalcourtmustmeetfederal

pleadingstandards.See In re Graphic Processing Units Antitrust Litig., 527F.Supp.2d1011,

1025(N.D.Cal.2007)(hereinafter“GPU I”).Accordingly, indirectpurchasersmustsatisfythe

federalpleadingstandardssetforthinTwombly andIqbal whenattemptingtoassertclaimsunder

statelaw infederalcourt.See St. Clair v. Citizens Fin. Grp., 340F.App’x62, 65n.2(3dCir.

2009)(concluding“thestatelaw antitrustclaimsareonlyviableifthecorrespondingfederal

5 TheEPPsrelyonthesameassertionsasDPPswithregardtoeconomicfactors, specifically:(1)thegenericdrugmarketisacommoditiesmarket;(2)thereexisthighbarrierstoentry;(3)themarketishighlyconcentratedamongafew manufacturers;(4)demandisinelasticandconsumerscannotsubstituteClobetasolforotherdrugs;and(5)MACpricingdiscouragesmanufacturersfrom successfullybeingabletounilaterallyincreaseprices.(See EPPCompl., ¶¶63, 176-203.)


15

claimsaresufficient”);Rick-Mik Enters., 532F.3dat976n.5(“[S]tatelaw antitrustclaimsare

derivativeofthefederallaw claims.Becausethefederalclaimsfail, thestatelaw claimsfail.”);

Lantec, Inc. v. Novell, Inc., 306F.3d1003, 1023n.9(10thCir.2002)(same).BecauseEPPs’

antitrust, consumerprotection, andunjustenrichmentclaimsfailtomeettheTwombly/Iqbal

standard, thoseclaimsfailasamatteroflaw.See Robinson v. Prison Health Servs., Inc., No.

CIV.A.10-cv-7165, 2014W L2452132, at*8(E.D.Pa.June2, 2014)(“Tosurviveamotionto

dismissonRobinson’sstatelaw claimshemustpleadsufficientfactstosupportaprimafacie

caseforeachofhisclaims.Robinson’samendedcomplaintlacksthespecificityand

particularityrequiredbyTwombly.”).Moreover, everysinglestatelaw underwhichEPPsbring

anantitrustclaim, eitherbystatuteorcaselaw, providesthatdecisionsoffederalcourtson

ShermanActclaimsareeitherdeterminativeorhighlypersuasivewithrespecttotheirstate

analogues.(See AppendixB.) Unsurprisingly, courtsthereforeregularlydismissstatelaw

claimswhendismissingShermanActclaimsbasedonthesameallegations.(See supra 5-7.)

ThisCourtshoulddothesame.

III. EPPS LACK STATUTORY STANDING TOASSERT FEDERAL OR STATE LAW CLAIMS

Indeterminingwhetheraprivateplaintiffhasstandingtobringaclaim foranalleged

violationoftheShermanAct, federalcourtsapplythemulti-factortestsetoutbytheSupreme

CourtinAssociated Gen. Contractors of California., Inc. v. California State Council of

Carpenters, 459U.S.519, 545-46(1983)(hereinafter“AGC”).Thosefactors, whichhavebeen

adoptedbymanystates(including27ofthejurisdictionsatissuehere)6ininterpretingtheirown

6 See AppendixC.Moreover, giventheharmonizationprinciplesgoverningapplicationoftheirantitrustlaws, theAGC factorsshouldalsobeappliedtothosestateswhosecourtshaveneitherexpresslyadoptednorrejectedtheirapplication:Alabama;Hawaii;andRhodeIsland.See In re Dynamic Random Access Memory (DRAM) AntitrustLitig., 516F.Supp.2d1072,1095(N.D.Cal.2007)(givenharmonizationprinciples, “applicationoftheAGCmulti-


16

antitrustlaw, include:“(1)thecausalconnectionbetweentheantitrustviolationandtheharm to

theplaintiffandtheintentbythedefendanttocausethatharm, withneitherfactoralone

conferringstanding;(2)whethertheplaintiff’sallegedinjuryisofthetypeforwhichtheantitrust

lawswereintendedtoprovideredress;(3)thedirectnessoftheinjury, whichaddressesthe

concernsthatliberalapplicationofstandingprinciplesmightproducespeculativeclaims;(4)the

existenceofmoredirectvictimsoftheallegedantitrustviolations;and(5)thepotentialfor

duplicativerecoveryorcomplexapportionmentofdamages.” In re Lower Lake Erie Iron Ore

Antitrust Litig., 998F.2d1144, 1165-66(3dCir.1993)(citingAGC)).Manystates–including

thosethathavepassedlegislationrepealingthecompletebanonindirectpurchaseractionsset

outinIllinois Brick Co. v. Illinois, 431U.S.720(1977)–haveincorporatedthe“AGC Factors”

intotheirownanalysisofwhetheraplaintiffhasantitruststandingunderstatestatutes.See In re

Refrigerant Compressors Antitrust Litig., No.2:09-MD-02042, 2013W L1431756, at*8-9(E.D.

Mich.Apr.9, 2013)(factthatstateshaverepealedIllinois Brick isdistinctfrom issueofwhether

indirectplaintiffsinpursuingstateclaimshaveallegedantitruststandingunderAGC Factors);In

re DRAM Antitrust Litig., 516F.Supp.2dat1087(N.D.Cal.2007)(same).EPPsfailtosatisfy

theAGC factorshere.

Astothefirstfactor, EPPshavefailedtoadequatelyallegeacausalconnectionbetween

anyallegedoverchargebyDefendantsandtheirownlosses.TheEPPComplaintitself

acknowledgesthatthepricepaidbyconsumersismodifiedbyPharmacyBenefitManagers

(“PBMs”)andthirdpartypayers, whothemselvessetthepricesfordrugsundera“Maximum

AllowableCost”(“MAC”)formula.(See EPPCompl.¶¶78-80.) TheW ACpricessubmittedby

factortestisappropriateindeterminingplaintiffs’[state]antitruststanding”evenwithoutstatecourtshavingexplicitlyadoptedthetest).


17

manufacturersaresubjecttonumerousfactorsbeforethepricesreimbursedbyEPPsareset.(Id.

¶76(“Thebenchmarksarenotactualtransactionprices;rather, theyarethemanufacturer’s

reportedlistprice.Accordingly, W ACpricesdonottakeintoaccountdiscountsthatmaybe

provided, e.g., forvolumesales.”).) Forthatreason, EPPsareunabletolinkthepricesallegedly

fixedbyDefendantswiththepricestheyclaimedtohavepaidthemselves.

Astothesecondfactor, theEPPsarenotconsumers:theyarehealthinsurancefundsand

managersorprovidersofemployeehealthbenefitsthatco-purchaseorreimbursemembersfor

theirpurchasers.Assuch, anyallegedinjurythattheysufferedisnotofthetypethattheantitrust

lawswereintendedtoprovideredress.See Steamfitters Local Union No. 420 Welfare Fund v.

Philip Morris, Inc., 171F.3d912, 927(3dCir.1997)(healthfundslackedstandingunderAGC

becausetheyare“notconsumersforcedtopayhigherpricesfortobaccoproductsorcompetitors

harmedbydefendants’[allegedconspiracy]”).

Astothethirdfactor, EPPs’injuryisclearlyindirect, sincetheEPPComplaintdoesnot

allegethattheypurchasedClobetasoldirectlyfrom Defendants;indeedtheclassdefinitions

explicitlyexcludeanyonewhodirectlypurchasedClobetasolfrom Defendants.(EPPCompl.¶¶

230-31.) Here, EPPsaremoredistantfrom theallegedpricefixingthantypicalindirect

purchaserplaintiffsbecauseofthenumberof“linksinthechain”inthepharmaceuticalindustry.

Clobetasolpassesfrom manufacturerstowholesalers, thenontodistributors, thenontoretail

pharmacies(manyofwhichinturnusePBMsasanintermediarytonegotiatepurchaseprices

anddiscounts).(See EPPCompl.¶74.);see also Vista Healthplan, Inc. v. Cephalon, Inc., No.

2:06-cv-1833, 2015W L3623005, at*8(E.D.Pa.June10, 2015)(denyingclasscertificationto

endpayors, noting“thevariouslinksinthepharmaceuticalsupplychain, andthatnumerous

entitiescouldcontributeallorpartofthecostofanyparticularprescription...[makeit]


18

impossibletodeterminewhetheranendpayorbelongedwithintheclasswithoutconsidering‘the

individualcontractualrelationshipsunderlyingeachtransaction’”)(quotingIn re Skelaxin

(Metaxalone) Antitrust Litig., 299F.R.D.555, 569(E.D.Tenn.2014)).Theamountsultimately

reimbursedbyEPPsaresubjectnotonlytoallofthosefactors, butalsotothetermsoftheir

variousinsurancecontractswiththeirmembers.

Astothefourthfactor, totheextentthatanyonehasbeeninjured, thereareclearlyparties

withmoredirectinjuriesthanEPPs:namely, thedirectpurchasersofClobetasol.Thosesame

directpurchasershaveassertedantitrustclaimsinthisMDLagainstDefendantsbasedon

identicalconduct, ashaveindirectpurchaserindependentpharmacies.(DPPCompl.¶¶218-30;

IRPCompl.¶¶213-20.) TheexistenceofbothDPPsand indirectresellerplaintiffs, allofwhom

aresignificantlyclosertotheallegedpriceincreasesthanEPPs, significantly“diminishesthe

justificationforallowingamoreremoteparty”toenforcetheantitrustlawsbecausedenialof

recoverytoEPPs“isnotlikelytoleaveasignificantantitrustviolationundetectedor

unremedied.” AGC, 459U.S.at542.7

Finally, astothefifthAGC factor, moving“furtherdownthechain”ofdistribution

“increase[s]theeconomiccomplexityofapportioningdamages.” Loeb Indus. Inc. v. Sumitomo

Corp., 306F.3d469, 486(7thCir.2002);accord, e.g., Crouch v. Crompton Corp., No.02-CVS-

4375, 2004W L2414027, at*19(N.C.Super.Ct.Oct.28, 2004)(“Asdamageclaimsmovefrom

directtoindirectandthedistributionchainbecomesmorecomplex, thepossibilityoffactors

7 EPPs’ShermanActclaim shouldbedismissedonsimilargrounds.ThoughEPPsseekonlyinjunctivereliefwithrespecttotheirfederalclaim, thesesameconsiderationsapplywithrespecttothatclaim.See In re AluminumWarehousing Antitrust Litig., No.13-md-2481, 2014W L4277510, at*39(S.D.N.Y.Aug.29, 2014)(“Therewillalwaysbeotherswhoaremoredirectlyinjuredthanthem, aswellasotherswhowillbemoreefficientenforcersoffederalantitrustlaws.Thattheseplaintiffsonlyrequestinjunctivereliefdoesnot...eliminatethisissue.”);Siti-Sites.com, Inc. v. Verizon Commc’ns, Inc., No.10-cv-3751, 2010W L5392927, at*3(S.D.N.Y.Dec.29,2010)(“Aprivateplaintiffseekingreliefundertheantitrustlaws, whetheritbeintheform ofdamagesorinjunctiverelief,‘mustshow morethansimplyaninjurycausallylinkedtoaparticular’violation....”), aff’d, 428F.App’x100(2dCir.2011)(citationomitted).


19

interveningtoaffectcausationandpricemultiplies, andclaimsbecomemorespeculative.”).

DeterminingdamagesforEPPs’stateantitrustclaimswouldrequirequantifyinganyovercharge

from Defendantstowholesalersandtracingthatoverchargedownstream throughmultiplelevels

inthedistributionchain, andeventuallytoEPPs, whoreimbursedsomeconsumersforaportion

oftheirdrugcosts.CompetitionatthewholesaleandretaillevelforClobetasol, theuseof

manufacturerdiscountsandpromotions, andvariationsinwhatportionofanyoverchargecould

bepassedontotheinsured, wouldallaffecttheamountspaidbyEPPs.Therearesomany

variablesthatcontributetopricingdecisionsatdifferentlevelsofthedistributionchainthatit

wouldbeexceedinglydifficult, ifnotimpossible, toisolatetheportionoftheretailpricethatis

attributabletotheallegedoverchargestemmingfrom theclaimedprice-fixingconspiracy.“The

torturedpaththatonemustfollow from the[defendants’]allegedwrongdoingtothe[plaintiffs’]

increasedexpendituresdemonstratesthattheplaintiffs’claimsarepreciselythetypeofindirect

claimsthattheproximatecauserequirementisintendedtoweedout.” Steamfitters Local Union

No. 420 Welfare Fund, 171F.3dat930.Moreover, sincetherearealsoDPPclaims, therewould

beanever-presentconcernofduplicativerecovery.8

BecausetheAGC factorsweighheavilyagainstaffordingEPPsstanding, theirantitrust

claimsshouldthereforebedismissed.

Moreover, asAGC developedoutofcommonlaw proximatecauseprinciples,9thesame

reasoningappliestoprecludeEPPs’statutoryconsumerprotectionandunjustenrichmentclaims.

See id. at937(“W ecanfindnojustificationforpermittingplaintiffstoproceedontheirunjust

8 Indeed, thisconcernhaspromptednumerousstatesthathavepassedIllinois Brick repeallegislationtoenactlawsaimedatpreventingduplicativerecovery.See 41S.D.Cod.Laws§37-1-33(SouthDakota);see also 740Ill.Comp.Stat.10/7(2)(Illinois);Minn.Stat.§325D.57(Minnesota);N.M.Stat.§57-1-3(C))(New Mexico);N.Y.Gen.Bus.Law §340(6)(New York);Or.Rev.Stat.§646.775(1)(b)(A)(Oregon);Vt.Stat.9§2465(b)(Vermont).

9 See AGC, 459U.S.at532-33;In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., No.09-cv-3690, 2013W L4506000,at*12(N.D.Ill.Aug.23, 2013).


20

enrichmentclaim oncewehavedeterminedthattheDistrictCourtproperlydismissedthe

traditionaltortclaimsbecauseoftheremotenessofplaintiffs’injuriesfrom defendants’

wrongdoing.”);see also, e.g., Southard v.Visa U.S.A. Inc., 734N.W .2d192, 199(Iowa2007)

(dismissingIowaunjustenrichmentclaim because“thiscommon-law theoryissubjecttothe

common-law rulethatbarsrecoveryforremoteinjuries”).Duetotheremotenatureoftheir

allegedinjuries, EPPscannotstateaclaim forviolationofconsumerprotectionstatutesorfor

unjustenrichmentandthoseclaimsmustbedismissed.See Supreme Auto Transp. LLC v.

Arcelor Mittal, 238F.Supp.3d1032, 1041-43(N.D.Ill.2017)(dismissingindirectpurchasers’

consumerprotectionandunjustenrichmentclaimsforlackofproximatecausebecauseAGC

factorswerenotsatisfied).

IV. EPPS LACK ARTICLE III STANDING TO SUEUNDER THE LAWS OF JURISDICTIONS WHERENO NAMED PLAINTIFF WAS ALLEGEDLY INJURED

SeveralofEPPs’claimsfailfortheindependentreasonthattheylackArticleIIIstanding

tobringclaimsunderthelawsofcertainjurisdictions.

EPPsdonotclaim tohaveresidedin, nortohavepurchasedormadereimbursementsfor

Clobetasolin, twoofthejurisdictionsinwhichtheyassertclaimsunderconsumerprotection

statutesandforunjustenrichment–AlaskaandtheU.S.VirginIslands.

ThecaseorcontroversyrequirementofArticleIIIoftheU.S.Constitutiondemandsthat

theplaintiff“demonstratestandingforeachclaim heseekstopress.” DaimlerChrysler Corp. v.

Cuno, 547U.S.332, 352(2006).“Itisnotsufficientthatthe‘injuryhasbeensufferedbyother,

unidentifiedmembersoftheclasstowhichtheybelongandwhichtheypurporttorepresent.’”

In re Niaspan Antitrust Litig., 42F.Supp.3d735, 758(E.D.Pa.2014)(quotingKlein v. Gen.

Nutrition Cos., 186F.3d338, 345(3dCir.1999)).Forthatreason, andassetoutmorefullyin

theIRPMTD, EPPslackArticleIIIstandingtobringclaimsunderthelawsofAlaskaandthe


21

U.S.VirginIslands, andthoseclaimsmustbedismissed.(See IRPMTD at22-25;EPPCompl.

¶¶288, 318, 340, 389.)

V. EPPS’ STATE ANTITRUST CLAIMS FAIL FOR STATE-SPECIFIC REASONS

IntheSecondCount, EPPsallegeviolationsundertheantitrustlawsof27statesand

territories.(See EPPCompl.¶¶256-85.) Inadditiontothereasonssetoutabove, manyofthose

claimsfailasamatteroflaw forthestate-specificreasonssetforthbelow.

A. The EPP Complaint Runs Afoul Of RestrictionsIn Several States On Indirect Purchaser Actions

Bybringingstateantitrustlaw claims, EPPsseektoavoidtheSupremeCourt’sholdingin

Illinois Brick, whichbarsindirectpurchasersfrom bringingdamagesclaimsundertheSherman

Act.See 431U.S.at747.However, theantitrustlaw ofIllinoisallowsonlythatstate’sAttorney

Generaltobringclassactionclaimsonbehalfofindirectpurchasers.See 740Ill.Comp.Stat.§

10/7(2);In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig., 64F.Supp.

3d665, 700(E.D.Pa.2014)(“TheIllinoisAntitrustActonlypermitsthestate’sAttorney

Generaltobringaclassactiononbehalfofindirectpurchasers.”).

Similarly, anumberofstates, includingArizona, Hawaii, Nevada, andUtahrequirethat

prospectiveindirectpurchaserplaintiffsprovidenoticetotheirrespectivestateattorney

generals.10 BecausetheComplaintdoesnotallegecompliancewiththisrequirement, EPPs’

10Arizona:Ariz.Rev.Stat.§44-1415(A)(“A personfilingacomplaint...foranyviolationoftheprovisionsofthisarticleshallsimultaneouslywiththefilingofthepleading...serveacopyofthecomplaint...ontheattorneygeneral.Proofofservice...shallbefiledwiththecourt.”).Hawaii:Haw.Rev.Stat.§480-13.3(“A classactionforclaimsforaviolationofthischapter...maybefiled, andmaybeprosecuted...byapersonotherthantheattorneygeneral...[solongas][a]filedcopyofthecomplaint...[is]servicedontheattorneygeneral...[and]thestatedeclinesorfailstotimelyelecttoproceedwiththeaction”).Nevada:Nev.Rev.Stat.§598A.210(“Anypersoncommencinganactionforanyviolationoftheprovisionsofthischaptershall, simultaneouslywiththefilingofthecomplaintwiththecourt, mailacopyofthecomplainttotheAttorneyGeneral.”).Utah:UtahCode§76-10-3109(9)(“Theattorneygeneralshallbenotifiedbytheplaintiffaboutthefilingofanyclassactioninvolvingantitrustviolationsthatincludesplaintiffsfrom thisstate.”).Theserequirementsaresubstantive.See In re AsacolAntitrust Litig., No.15-cv-12730, 2016W L4083333, at*15(D.Mass.July20, 2016)(dismissingclaimsbroughtunderantitruststatutesofArizona, Hawaii, andNevadaforfailuretopleadnoticetostates’attorneysgenerals


22

antitrustclaimsunderArizona, Hawaii, Nevada, andUtahlaw mustbedismissed.(See EPP

Compl.¶¶257, 260, 269, 279.)

B. No EPP Is A Citizen Or Resident Of Utah

AlthoughtheUtahAntitrustActpermitsindirectpurchaserlawsuits, courtsinthisdistrict

andothershaveconsistentlydismissedindirectpurchaserclaimsbroughtundertheUtah

AntitrustActwherenonamedplaintiffwasaUtahcitizenorresident.11 BecauseEPPsfailto

allegethatanyofthenamedplaintiffsisacitizenorresidentofUtah, theirclaim undertheUtah

AntitrustActmustbedismissed.(See EPPCompl.¶¶32-35, 279.)

C. EPPs Fail To Allege A Substantial Effect On Intrastate Commerce,As Required To State An Antitrust Claim In Several States

TheantitrustlawsofAlabama, Hawaii, Illinois, Kansas, Maine, Minnesota, Nebraska,

Nevada, New Mexico, New York, NorthCarolina, NorthDakota, Oregon, SouthDakota,

Tennessee, W estVirginia, W isconsin, andtheDistrictofColumbiaapplyonlytointrastate

activityand/orconductthathasasubstantialeffectwithinthestate–andnottoabroadlyalleged

nationwideconspiracysuchasthatallegedbyEPPs.(See AppendixD.)

EPPshavemadenoparticularfactualallegationsofanyprice-fixing(muchlessbid-

riggingormarketandcustomerallocation)conductwithinthosejurisdictions.Similarly, there

arenoallegationsotherthanboilerplatelegalconclusionsthattheallegedpricefixing

“substantiallyaffected”marketsinthosejurisdictions, eventhoughEPPsclaim theypurchased

because“thesestatelawsdonotseektodisplacetheFederalRulesorhaveRule23ceasetofunction”andfailuretoenfocethem would“encourageforum shoppingandtheinequitableadministrationoflaws”).

11 See In re Niaspan Antitrust Litig., 42F.Supp.3dat759-60(holdingthat“atleastonenamedplaintiffmustbeacitizenorresidentofUtahinordertoseekclasswidereliefundertheUtahAntitrustAct”);In re Aggrenox AntitrustLitig., 94F.Supp.3d224, 251-52(D.Conn.2015)(indirectpurchaserslackedstandingwhere, despiteallegationstheypurchasedproducts“inallfiftystates,”nonamedplaintiffwasaUtahcitizenorresident);In re Opana ERAntitrust Litig., 162F.Supp.3d704, 725(N.D.Ill.2016)(dismissingclaimsundertheUtahAntitrustActwherethecomplaintfailstoclaim thatanyofthenamedplaintiffsareUtahresidents);In re Nexium (Esomeprazole) AntitrustLitig., 968F.Supp.2d367,410(D.Mass.2013)(same).


23

Clobetasolinthem.Thosepurchasesalonearenotenoughtoestablishasubstantialeffecton

intrastatecommerce.Iftheywerethesubstantialeffectsrequirementwouldbesuperfluousfor

anyclaim broughtbyanin-stateplaintiff.EPPs’allegationscannotsurviveamotionto

dismiss.12 W ithoutspecificallegationsoffactsconnectingtheallegedconducttoeachstate, this

Courtcannotassesswhethertheconducthadanincidentalorsubstantialeffect–ifanyatall–on

thestateunderwhoselawsEPPsbringtheirclaims.

ThisCourtshouldthereforedismissEPPs’claimsundertheantitrustlawsofAlabama,

Hawaii, Illinois, Kansas, Maine, Minnesota, Nebraska, Nevada, New Mexico, New York, North

Carolina, NorthDakota, Oregon, SouthDakota, Tennessee, W estVirginia, W isconsin, andthe

DistrictofColumbia.(See EPPCompl.¶¶256, 259, 260-61, 263-64, 266, 268-69, 271-75, 277-

78, 281-82.)

VI. EPPS’ CONSUMER PROTECTION CLAIMS FAIL

Theproblem withallofEPPs’consumerprotectionclaimsisthatEPPs“havenottruly

pleaded claimsunder[thevariousstateconsumerprotectionlaws]sufficienttoshow their

entitlementtorecoverunderthem, asrequiredbyRule8.Rather, theyhavepleadedfederal

antitrustclaims...andtheymerelyallegethatthoseclaimsarealsoactionableundergeneral

consumerprotectionlaws.” In re Aggrenox Antitrust Litig., 94F.Supp.3d224, 255(D.Conn.

2015)(dismissingclaims)(emphasisinoriginal).EPPs’ownallegationsmakeclearthattheir

consumerprotectionclaimsarejustrepackagedShermanActprice-fixingclaims:EPPsaverthat

Defendantsdeceivedthem by“affecting, fixing, controlling, and/ormaintainingatnon-

12 See In re Cast Iron Soil Pipe & Fittings Antitrust Litig., No.1:14-md-2508, 2015W L5166014,at*23-26(E.D.Tenn.June24, 2015)(dismissingantitrustclaimsunderthelawsoftheDistrictofColumbia, Mississippi, Nevada,New York, NorthCarolina, SouthDakota, Tennessee, W estVirginia, andW isconsinbecauseplaintiffsfailedtoallegeasufficientnexustointrastatecommercewheretheyallegedtheprice-fixingschemeaffectedthe“entire[product]market”and“impactedcommercenationwide”).


24

competitiveandartificiallyinflatedlevels, thepricesatwhichgenericClobetasolwere[sic]sold,

distributed, orobtainedin[state]andtookeffortstoconcealtheiragreementsfrom Plaintiffsand

membersoftheDamagesClass.”(See EPPCompl.¶¶288-89, 292-93, 295, 297-98, 303, 305-

10, 312-18.) Onitsface, theseareantitrustclaimssimplyredesignatedasconsumerprotection

claimsfollowedbyarecitationoftheelementsofthoseclaimsundereachjurisdiction’sstatute.

Ifsuchallegationsweresufficienttostateaconsumerprotectionlaw claim, therewouldbeno

needforseparateantitrustlaws.See, e.g., In re Aggrenox Antitrust Litig., No.3:14-md-2516,

2016W L4204478, at*6-7(D.Conn.Aug.9, 2016)(holdingthat“‘plaintiffsmaynotassert

whatareessentiallyantitrustclaimsintheguiseofaclaim undertheIllinoisconsumerprotection

statute’”where“the‘allegationsofconsumerfraudoverlapentirelywiththeallegationsof

anticompetitiveconduct’”)(quotingIn re Wellbutrin XL Antitrust Litig., 260F.R.D.143, 162

(E.D.Pa.2009)).TheCourtshouldthereforedismissEPPs’consumerprotectionclaimsbecause

theunderlyingantitrustclaimsfail.See, e.g., Formula One Licensing, B.V. v. Purple Interactive

Ltd., No.C00-2222, 2001W L34792530, at*4(N.D.Cal.Feb.6, 2001)(“W hereaplaintifffails

tostateanantitrustclaim, andwhereanunfaircompetitionclaim isbaseduponthesame

allegations, suchstateclaimsareproperlydismissed.”).

Moreover, astheSupremeCourtheldinIqbal, “[a]pleadingthatofferslabelsand

conclusionsorformulaicrecitationoftheelementsofacauseofactionwillnotdo.”556U.S.at

678(quotationsomitted).Yeta“formulaicrecitation”isallthatEPPsprovide.Forexample, for

severalstates, EPPsrecitethat“Defendantsdeliberatelyfailedtodisclosematerialfactsto

[EPPs]andmembersoftheDamagesClassconcerningDefendants’unlawfulactivitiesand

artificiallyinflatedpricesforgenericClobetasol.Defendantsmisrepresentedtoallpurchasers

duringtheClassPeriodthatDefendants’genericClobetasolpriceswerecompetitiveandfair.”


25

(EPPCompl.¶292(Delaware);see also id. ¶¶295(Georgia), 298(Michigan), 303(Nevada),

305(New Jersey), 309(NorthDakota), 310(RhodeIsland), 312(SouthDakota), 313(Utah), 314

(Vermont), 315(Virginia), 316(W estVirginia).)

TheCourtshouldthereforedismisstheconsumerprotectionclaimsonpleadinggrounds

alone.Evenso, therearenumerousadditionalgroundsfordismissingtheseclaims.

A. Indirect Purchaser Claims Are Barred InStates That Have Not Repealed Illinois Brick

JustascourtsinmanystatesbartheuseofstateantitrustlawstoavoidtheIllinois Brick

rule, manycourtshaveprohibitedtheuseofstateconsumerprotectionlawsasameansof

performingan“endrun”aroundIllinois Brick.ThosestatesincludeAlaska, Florida, Missouri,

Montana, New Jersey, andSouthCarolina.Theseclaims, whichasnotedabove, aresimply

antitrustclaimspresentedas“consumerfraud,”mustthereforebedismissed.13 (See EPPCompl.

¶¶288, 294, 300-01, 305, 311.)

13 Alaska:In re Lidoderm Antitrust Litig., 103F.Supp.3d1155, 1163(N.D.Cal.2015)(dismissingconsumerprotectionclaim “inlightoftheclearintentoftheAlaskaantitruststatutereservingtotheAlaskaAttorneyGeneraltheabilitytoseekdamagesonbehalfofindirectpurchasers.”);In re DRAM Antitrust Litig., 516F.Supp.2dat1108(same).Florida:In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., No.09-cv-3690, 2015W L3988488, at*19(N.D.Ill.June29, 2015)(citingMack v. Bristol-Myers Squibb Co.,673So.2d100, 102(Fla.Dist.Ct.App.1996)(dismissingconsumerprotectionclaim because“Floridastilladherestothe‘directpurchaser’rulearticulatedinIllinoisBrick.”).Missouri:In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litig., 64F.Supp.3d665, 701-02(E.D.Pa.2014)(dismissingpricefixingclaim broughtunderMissouri’sconsumerprotectionlaw toavoid“provid[ing]anend-runaroundthestate’sprohibitionofantitrustclaimsbyindirectpurchasers”);accord In re Asacol Antitrust Litig., No.15-cv-12730-DJC, 2016W L4083333, at*12(D.Mass.July20, 2016);Inre New Motor Vehicles Canadian Exp. Antitrust Litig., 350F.Supp.2d160,192(D.Me.2004).Montana:In reStatic Random Access Memory Antitrust Litig., No.07-md-01819CW ,2010W L5094289,at*4(N.D.Cal.Dec.8,2010)(dismissingMontanaconsumerprotectionclaim pursuanttoIllinoisBrick);In re TFT-LCD (Flat Panel)Antitrust Litig., 599F.Supp.2d1179, 1191(N.D.Cal.2009)(same).New Jersey:In re New Motor Vehicles, 350F.Supp.2dat195(D.Maine2004)(dismissingindirectpurchaserNJCFA claim because“New Jersey’sAntitrustActpermitsonlydirectpurchaserstorecover, and[]allowingrecoveryforantitrustviolationsundertheNJCFAwouldviolatetheAntitrustAct'srestrictiononindirectpurchasersuits.”).South Carolina:In re Aggrenox AntitrustLitig., 2016W L4204478, at*9(holdingthat“IllinoisBrickisdecisive”inpreventingindirectpurchasersfrombringingantitrustclaimsundertheSouthCarolinaUnfairTradePracticesAct).


26

B. Several States’ Consumer Protection Statutes Bar Class Actions

A numberofstates, includingAlaska, Georgia, Montana, SouthCarolina, andUtah,

prohibitclassactionsforallegedviolationsofthosestates’consumerprotectionlaws.Thus,

EPPs’classactionclaimsunderthesestatutesmustbedismissed.14 (See EPPCompl.¶¶288,

295, 301, 311, 313.)

C. Several Consumer Protection StatutesAre Inapplicable To Antitrust Conduct

EPPs’consumerprotectionsclaimsunderthelawsofsixjurisdictions–Arkansas,

Georgia, New Mexico, RhodeIsland, W estVirginia, andtheDistrictofColumbia–mustbe

dismissedbecausethesejurisdictionsdonotrecognizeconsumerprotectionactionsthatare

basedonallegationsofanantitrustconspiracy.15 Because, asnotedabove(supra 23-24), the

claimsassertedintheThirdCountoftheEPPComplaintaresimplyre-warmedantitrustclaims,

14 Alaska:AlaskaStat.§45.50.577(i)(“Onlytheattorneygeneral, inasuitbroughtunderthissection, mayseekmonetaryreliefforinjuryindirectlysustainedforaviolation.”).Georgia:In re Target Corp. Customer Data Sec.Breach Litig., 66F.Supp.3d1154,1163-65(D.Minn.2014)(holdingthatplaintiffscannotmaintainclassactionsunderconsumerprotectionstatutesofGeorgia, Montana, SouthCarolinaandUtah).Montana:Mont.Code30-14-133(a)(“maybringanindividualbutnotaclassaction”);In re DRAM Antitrust Litigation, 516F.Supp.2dat1104(dismissingMontanaandSouthCarolinaconsumerprotectionclaims);In re Target Corp. Customer Data Sec.Breach Litig., 66F.Supp.3dat1163-65.South Carolina:In re Target Corp. Customer Data Sec. Breach Litig., 66F.Supp.3dat1163-65.Utah:In re Target Corp. Customer Data Sec. Breach Litig., 66F.Supp.3dat1163-65.

15 Arkansas:Ark.Code§4-88-107(a)(specificallyenumeratingprohibitedconduct, pricefixingnotincluded);Inre Lidoderm Antitrust Litig., 103F.Supp.3d1155at1166-67(holdingthatArkansasDTPA doesnotextendtomonopolyandpriceinflationpricefixingclaims);In re TFT-LCD (Flat Panel) Antitrust Litig., 586F.Supp.2d1109,1125(N.D.Cal.2008)(refusingtoextendthereachoftheconsumerprotectionstatutetoallegedprice-fixingconduct).District of Columbia:GPU I, 527F.Supp.2dat1029-30(pricefixingisnotthekindofconductprohibitedbyD.C.consumerfraudstatute).Florida:In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 2015W L3988488, at*19(dismissingFloridaandNorthCarolinaconsumerprotectionclaimsthatweremerely“repackag[ed]”versionsoftheir“insufficientlypledprice-fixingclaims”).Georgia:HLD Enters., Inc. v. MichelinNorth Am., Inc., No.Civ.A.1:03CV 2558, 2004W L2095739, at*4(N.D.Ga.June29, 2004)(“[there]isnoindicationthattheGeorgiaGeneralAssemblyintendedforthissectionoftheUniform DeceptiveTradePracticesActtobeanadditionalmethodforantitrustenforcement...[and][r]ather, thegoalofthestatuteistheprotectionofconsumersfrom overreachingandfraudonthepartofsellers.”).New Mexico:N.M.Stat.§57-12-2(D);GPU I,527F.Supp.2dat1029-30(pricefixingisnotthekindofconductprohibitedbyNew Mexicoconsumerfraudstatute).Rhode Island:GPU I, 527F.Supp.2dat1029-30(pricefixingisnotthekindofconductprohibitedbyRhodeIslandconsumerfraudstatute).West Virginia:In re DRAM Antitrust Litigation, 516F.Supp.2dat1118(dismissingclaim because“itis[]clearthatthestatuteisaimedatconductdifferentfrom theallegationsofprice-fixing.”).


27

EPPs’claimsundertheconsumerprotectionstatutesofthesesixjurisdictionsmustbedismissed.

(See EPPCompl.¶¶289, 293-95, 306, 308, 310, 316.)

D. EPPs Fail To Meet Rule 9(b) PleadingStandard For Florida Consumer Protection Claim

EPPs’claim underofFla.Stat.§501.204(FloridaDeceptiveandUnfairTradePractices

Act, “FDUTPA”)(see EPPCompl.¶294)mustbepleadwiththeparticularityrequiredby

FederalRuleofCivilProcedure9(b).See WrestleReunion, LLC v. Live Nation Television

Holdings, Inc., No.8:07-cv-2093-JDW -MSS, 2008W L3048859, at*3(M.D.Fla.Aug.4,

2008).Accordingly, EPPs’failuretoplead“theidentityoftheperson[s]whomade

misrepresentation[s], thetime, placeandcontentofthemisrepresentation[s], andthemethodby

whichthemisrepresentation[s][were]communicatedtotheplaintiff”mandatesdismissalofthis

claim.See In re Potash Antitrust Litig., 667F.Supp.2d907, 947(N.D.Ill.2009)(“Potash”),

vacated and remanded on other grounds sub. nom., Minn–Chem, Inc. v. Agrium Inc., 657F.3d

650(7thCir.2011);see also In re Refrigerant Compressors Antitrust Litig., No.2:09-md-02042,

2013W L1431756, at*20-21(E.D.Mich.Apr.9, 2013)(dismissingFDUTPA claim onprice-

fixingtheoryforfailuretopleadwithrequisiteRule9(b)particularity);In re Packaged Ice

Antitrust Litig., 779F.Supp.2d642, 665(E.D.Mich.2011)(same).

E. EPPs’ Claims Are Too Remote To Establish Standing UnderThe Laws Of Arkansas, California, Florida, And North Carolina

EPPs’claimsaretooremotetoestablishstandingundertheconsumerprotectionlawsof

Arkansas, California, Florida, andNorthCarolina.(See EPPCompl.¶¶289-90, 294, 308.)

UnderCalifornialaw, forinstance, ifaconsumerprotectionclaim isbasedonthesame


28

allegationsasanantitrustclaim, theplaintiffs’standingwithrespecttotheformerclaim turnson

theplaintiffs’abilitytostateaclaim underthelatter.16

F. EPPs Fail To Allege Deceptive Conduct As RequiredUnder The Consumer Protection Laws Of Several States

Manystateconsumerprotectionlawsrequireplaintiffstoallegetheexistenceof

“deceptive”or“unconscionable”conduct.ThosestatesincludeColorado, Delaware, Michigan,

Minnesota, New Mexico, New York, NorthDakota, SouthDakota, Utah, Virginia, and

W isconsin.(See AppendixE.) “Ineachofthesestates, pleadingunconscionabilityrequires

somethingmorethanmerelyallegingthatthepriceofaproductwasunfairlyhigh.” GPU I, 527

F.Supp.2dat1029;see also In re DRAM Antitrust Litig., 516F.Supp.2dat1113-17

(dismissing, inter alia, New York, RhodeIsland, andUtahconsumerprotectionclaims).

UnconscionabilityrequiresEPPstoplead“grosslyunequalbargainingpower,”GPU I, 527F.

Supp.2dat1030, ortoallegea“grossdisparity”betweenthepricepaidforthedrugsandthe

valuereceived, Taylor v. United Mgmt., Inc., 51F.Supp.2d1212, 1217(D.N.M.1999).EPPs

mustprove“notonlythatoneofthepartieslackedameaningfulchoicebutalsothatthetermsof

thecontractareunreasonablyfavorabletotheotherparty.” GPU I, 527F.Supp.2dat1030.

16 See Chavez v. Whirlpool Corp., 93Cal.App.4th363, 374-75(Cal.Ct.App.2001);Formula One Licensing v.Purple Interactive, 2001W L34792530, at*4(N.D.Cal.Feb.6,2001).Thus, underCalifornialaw, EPPs’lackofantitruststanding(andinparticulartheirlackofdirecttransactionswithDefendants)compelsdismissaloftheirconsumerprotectionclaims.See In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 2015W L3988488, at*17-19(findingindirectpurchaserplaintiffslackedstandingtobringclaimsunderCalifornia’sconsumerprotectionlaw);see also Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court, 209P.3d937,941(Cal.2009).RemotenessisalsofataltoindirectpurchaserclaimsunderArkansas’sandNorthCarolina’sconsumerprotectionlaws.See In re Dairy Farmers, 2015W L3988488, at*17, 19-20(statingthat“IndirectPlaintiffs’remotenessproblemsintheantitrustcontextalsoprecludetheirrebrandedantitrustclaimsundertheArkansasDeceptiveTradePracticesAct”andthat“IndirectPlaintiffs’allegedinjuriesaretooremotetosatisfy[the]proximate-causationrequirement”ofNorthCarolina’sconsumerprotectionlaw).ThesamelogicprecludesEPPs’consumerprotectionclaimsunderFloridalaw.See id. at*18(underFlorida’sconsumerprotectionlaw, “causation...mustbedirect, ratherthanremoteorspeculative”)(quoting2P Comm’l Agency S.R.0.v. SRT USA, Inc., No.2:11-cv-652-FtM-29SPC, 2013W L246650, at*4(M.D.Fla.Jan.23, 2013)).


29

NoneoftheEPPsallegethattheyengagedinanycommercialactivitywithany

Defendant, letalonethatDefendantsmadeanydeceptiverepresentationsorexercisedpower

overthem.NordotheEPPsmakeanythingmorethanthemostperfunctoryandconclusory

allegationsofdeception.Therefore, theconsumerprotectionclaimsunderthelawsofColorado,

Delaware, Michigan, Minnesota, New Mexico, New York, NorthDakota, SouthDakota, Utah,

Virginia, andW isconsinshouldbedismissed.(See EPPCompl.¶¶289, 291-92, 295, 299-300,

306-07, 309-10, 312-13, 315, 317.)

G. North Carolina And Wisconsin Law RequireEPPs To Allege Reliance On A Misrepresentation

TosucceedontheirconsumerprotectionclaimsbasedinNorthCarolinaandW isconsin

law, EPPsmustallegethatDefendantsmademisrepresentationsthatwerematerialtoEPPs’

ClobetasolpurchasesandthatEPPsactuallyreliedonthosemisrepresentations.17 Here,

however, EPPsdonotallegethatDefendantsmadeafalsepromiseormisrepresentation, much

lessthattheyreliedonanymisrepresentations.

NotonlydoEPPsfailtopleadsuchfacts, butthefactstheydoallegeshow thatthe

oppositeistrue.Forexample, theComplaintstatesthatpricesforClobetasolareinelastic(i.e.,

pricehaslittleeffectondemand)andthedrugslackedsubstitutes.(See EPPCompl.¶¶176,

188-90.) Thus, byEPPs’ownadmission, thepriceofClobetasolwasnotmaterialtotheir

decisionstopurchasethedrugs, andtheydidnotrelyonDefendants’representationswhen

buyingthedrugs.See, e.g., Jones v. ConAgra Foods, Inc., No.C12-01633, 2014W L2702726,

at*17(N.D.Cal.June13, 2014)(findingplaintiffsfailedtoshow materialitybecausethey

17 See Bumpers v. Cmty. Bank of N. Va., 747S.E.2d220,226(N.C.2013)(“aplaintiffmustshow relianceontheallegedlymisrepresentedstatement”);Spacesaver Corp. v. Marvel Grp., Inc., 621F.Supp.2d659, 663(W .D.W is.2009)(underW isconsinstatute, therelevantquestion“iswhether[defendant’s]representationmateriallyinducedthe plaintiff’s decision to act andwhethertheplaintiffwouldhaveactedintheabsenceoftherepresentation”)(emphasisinoriginal).


30

wouldhavepurchasedproductsdespitedefendant’srepresentations).Inaddition, EPPscouldnot

havereliedonanymisrepresentationbecauseEPPs didnotdecidetopurchasethedrugs, nordid

theyactuallypurchasethedrugs.Rather, theymerelyreimbursedthecostofthedrugs

purchased by their members.BecauseEPPshavefailedtoallegematerialrelianceonany

misrepresentation, theirclaimsunderNorthCarolinaandW isconsinlaw shouldbedismissed.

(See EPPCompl.¶¶308, 317.)

H. EPPs Allege An Insufficient In-State Injury To MaintainA Claim Under Several States’ Consumer Protection Laws

Somejurisdictions–includingDelaware, Florida, Massachusetts, New Hampshire, New

YorkandNorthCarolina–providethattheirconsumerprotectionlawsonlyaddresspurelyor

primarilyintrastateconduct, thesamerulethatappliesinsomestatesforantitrustclaims(see

supra 22-23).(See AppendixF.) Inthepresentcase, however, EPPs’Complaintdescribesa

conspiracywithnationwide effectsandexpresslypleadsthattheconducthadasubstantialeffect

oninterstate commerce(see EPPCompl.¶¶60-61), whileprovidingonlyconclusoryallegations

concerningeffectsonintrastatecommercegenerally, ratherthananyfactssupportingtheimpact

oftheconductontheintrastatecommerceofanyparticularState(id. ¶62).

EPPs’consumerprotectionclaimsunderthelawsofDelaware, Florida, Massachusetts,

New Hampshire, New York, NorthCarolina, VermontandtheDistrictofColumbiamustbe

dismissed.(See id.¶¶292-94, 297, 304, 307-08, 314.)

I. Massachusetts And West Virginia RequireStatutory Notice As A Prerequisite To Filing Suit

ThisCourtshoulddismissEPPs’Massachusettsconsumerprotectionclaim becausethat

staterequiresplaintiffstosendawrittendemandforreliefbeforefilingacomplaint.18 W est

18 See Mass.Gen.Lawsch.93A§9.Thisrequirementisa“pre-requisitetosuit”andisstrictlyappliedbyMassachusettscourts.See In re Flonase Antitrust Litig., 692F.Supp.2d524,539-40(E.D.Pa.2010)(citingRodi v.


31

Virginiahasasimilarrequirement.19 EPPsdonotallegethattheyevermadesuchdemands, and

theirclaimsunderMassachusettsandW estVirginiaconsumerprotectionlawsshouldtherefore

bedismissed.(See EPPCompl.¶¶297, 316.)

J. EPPs’ Missouri And Vermont Consumer Protection ClaimsFail Because Defendants Do Not Sell Directly To Consumers

Vermont’sconsumerprotectionlaw definesaselleras“apersonregularlyandprincipally

engagedinabusinessofsellinggoodsorservicestoconsumers.”20 ThisCourtshoulddismiss

EPPs’Vermontclaim becauseEPPsthemselvesallegethatDefendantsdo not selldirectlyto

consumers.(See EPPCompl.¶¶74, 231-32.) Similarly, Missouri’sconsumerprotectionlaw

requiresthataplaintiffshow thatheorsheboughtorleased“merchandisefrom defendant ...for

personal, family, orhouseholdpurposes.”21

TheEPPComplaintspecificallyallegesthatEPPsdid not purchasedirectlyfrom

Defendants.TheconsumerprotectionclaimsunderMissouriandVermontlaw mustthereforebe

dismissed.(See EPPCompl.¶¶300, 314.)

S. New England Sch. Of Law,389F.3d5,19(1stCir.2004));Sheet Metal Workers Local 441 Health & WelfarePlan v. GlaxoSmithKline, PLC, 737F.Supp.2d380, 411-12(E.D.Pa.2010);In re Suboxone (BuprenorphineHydrochloride & Naloxone) Antitrust Litig., 64F.Supp.3dat701.

19 See W .Va.Code46a-6-106(c)(“noaction...maybebroughtpursuanttotheprovisionsofthissectionuntilthepersonhasinformedthesellerorlessorinwritingandbycertifiedmail, returnreceiptrequested, oftheallegedviolationandprovidedthesellerorlessortwentydaysfrom receiptofthenoticeofviolationbuttendaysinthecaseacauseofactionhasalreadybeenfiledtomakeacureoffer.);Stanley v. Huntington Nat’l Bank, No.1:11CV54,2012W L254135, at*7(N.D.W .VaJan.27, 2012), aff’d, 492F.App’x456(4thCir.2012)(“plaintiff’sfailuretocomplywiththemandatoryprerequisite[i.e., thedemandletter]barsherfrom bringingaclaim”).

20 See VTStat.tit.9§2451a(2011);In re Solodyn (Mino Hydrochloride) Antitrust Litig., No.14-md-02503, 2015W L5458570, at*18(D.MassSept.16,2015)(dismissingVermontclaimswhereend-payerplaintiffsfailedtoplausiblyallegethatdefendantpharmaceuticalmanufacturerssolddirectlytoconsumers“asrequiredtofitVermont’sstatutorydefinitionofaseller”).

21 Chochorowski v. Home Depot U.S.A., Inc., 295S.W.3d194, 198(Mo.Ct.App.2009)(emphasisadded).


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K. EPPs’ Consumer Fraud Claims Fail Because They Are Not Consumers

TorecoverundertheconsumerprotectionlawsofCalifornia, Michigan, Vermont, and

theDistrictofColumbia, EPPsmustshow thattheDefendants’allegeddeceptionwasdirected

toward consumers orrelieduponby consumers.Here, however, EPPsarewelfareplansand

managersorprovidersofemployeehealthbenefitsthatreimbursetheirmembers–i.e.,

consumers–forpurchasesofClobetasol.BecauseEPPsarenotthemselvesconsumers, their

claimsunderthesejurisdictions’consumerprotectionlawsmustbedismissed.22 (See EPP

Compl.¶¶290, 293, 298, 314.)

Inaddition, theconsumerfraudstatutesoftheDistrictofColumbia, Hawaii, Missouri,

Montana, Nevada, RhodeIsland, andW estVirginialimittheclassofplaintiffswhomaypursue

privateactionstothosewhopurchasedorleased“goodsorservicesprimarilyforpersonal,

family, orhouseholdpurposes.”23 BecauseEPPsdonotandcannotallegethattheypurchased

Clobetasolforpersonal, family, orhouseholdpurposes, theirconsumerfraudclaimsfailasa

matteroflaw forthesestates.24 (See EPPCompl.¶¶293, 296, 300-01, 303, 308, 310, 316.)

22 California:In re WellPoint, Inc. Out-Of-Network “UCR” Rates Litig., 903F.Supp.2d880, 898(N.D.Cal.2012)(“privateenforcementactionsmaybebroughtonlybyonewhohassufferedinjuryinfactandhaslostmoneyorpropertyasaresultoftheunfaircompetition.”).District of Columbia:Cannon v. Wells Fargo Bank, N.A., 926F.Supp.2d152, 172(D.D.C.2013)(ConsumerProtectionProceduresAct“appliesonlytoconsumer-merchantrelationships”).Michigan:Zine v. Chrysler Corp., 600N.W .2d384,392-93(Mich.App.1999)(intentoftheMichiganlaw is“toprotectconsumersintheirpurchasesofgoodswhichareprimarilyusedforpersonal, familyorhouseholdpurposes....[I]fanitem ispurchasedprimarilyforbusinessorcommercialratherthanpersonalpurposes, theMCPA doesnotsupplyprotection.”).Vermont:In re Aggrenox Antitrust Litig., 2016W L4204478,at*9(statutory“definitionof‘consumer’allowsbusinessestosueasconsumerswithrespecttotheproductsthattheyuse asconsumers.ThefactthatHumana’smembersareconsumers, andthatHumanaco-purchasesorreimbursesforconsumerproductsthatitsmembersuse, doesnotmakeHumanaaconsumerofthoseproducts.”).

23 District of Columbia:D.C.Code§28-3901(a)(2)(B)(i).Hawaii:Haw.Rev.§480-1.Missouri:Mo.Rev.Stat.§407.025(1).Montana:Mont.Code§30-14-102(1).Nevada:Nev.Rev.Stat.§598.170.Rhode Island:R.I.Gen.Laws.§6-13.1-5.2(a).West Virginia:W .Va.Code§46A-6-102(2).

24 District of Columbia:In re Cast Iron Soil Pipe & Fittings Antitrust Litig., No.1:14-md-2508,2015W L5166014,at*30(E.D.Tenn.June24, 2015)(rejectingclaimsunderconsumerprotectionstatutewhere“theultimateretailtransaction”wasnot“betweenthefinaldistributorandtheindividualmemberoftheconsumingpublic”).Hawaii:In re Asacol Antitrust Litig., 2016W L4083333, at*15(same).Missouri:United Food & Commer.Workers Local 1776 & Participating Employers Health & Welfare Fund v. Teikoku Pharma USA, Inc., 74F.Supp.3d1052,1082-83(N.D.Cal.2014)(dismissinghealthplan’sconsumerprotectionclaimsbecauseitdidnotpurchase


33

L. EPPs Do Not Allege That Defendant Is A Supplier AsRequired By The Utah Consumer Sales Practices Act

TheUtahConsumerSalesPracticesActprohibitsdeceptiveandunconscionableactsor

practices“byasupplier inconnectionwithaconsumertransaction,”anditdefinestheterm

“supplier”as“aseller, lessor, assignor, offeror, broker, orotherpersonwhoregularlysolicits,

engagesin, orenforcesconsumertransactions.”UtahCodeAnn.§13-11-3(6), 4(1), 5(1)

(emphasisadded).EPPsdonotallegethatDefendantsregularlysolicit, engagein, orenforce

consumertransactions.BecauseDefendantsarenot“suppliers”asdefinedbytheUtahstatute,

EPPs’consumerprotectionclaim thereundermustbedismissed.See In re New Motor Vehicles

Canadian Exp. Antitrust Litig., 350F.Supp.2dat204(dismissingUtahconsumerprotection

claim).

M. EPPs’ Claims Under Nevada Law Must Be DismissedBecause EPPs Are Not Elderly Or Disabled Persons

Only“anelderlypersonorapersonwithadisability”maybringaprivatecivilaction

undertheNevadaDeceptiveTradePracticesAct.Nev.Rev.Stat.§§598.0903-598.0999;see

also In re Chocolate Confectionary Antitrust Litig., 749F.Supp.2d224, 234(M.D.Pa.2010).

BecauseEPPsareneitherelderlynordisabled, theirclaim mustbedismissed.

forpersonalorfamilyconsumption);Cast Iron, 2015W L5166014, at*31(same).Montana:In re LidodermAntitrust Litig., 103F.Supp.3d1155, 1165(N.D.Cal.2015)(holdingthatEPPwasnotaconsumerandthereforedismissingconsumerprotectionclaim).Nevada:In re Wellbutrin XL Antitrust Litig., 260F.R.D.143, 163-64(E.D.Pa.2009)(privatecivilactionsundertheNevadaDeceptiveTradePracticesActlimitedtosuitsby“anelderlypersonorapersonwithadisability.”);In re Chocolate Confectionary Antitrust Litig., 749F.Supp.2d224, 234(M.D.Pa.2010)(same);see also Cast Iron, 2015W L5166014, at*31(dismissingclaim underNevadaactwhereindirectpurchaserplaintiffswerenot“naturalpersons”).Rhode Island:Sheet Metal Workers Local 441 Health &Welfare Plan v. GlaxoSmithKline, PLC, 737F.Supp.2d380, 423(E.D.Pa.2010)(citingRhode Island Laborers’Health & Welfare Fund ex rel. Trustees v. Philip Morris, 99F.Supp.2d.174,188-89(D.R.I.2000))(dismissingEPPconsumerprotectionclaimsbecausetheplansdidnotallege, nordidthefactssuggest, thatanyofitspurchasesofthedefendants’goodswereintendedtobeusedprimarilyforpersonal, family, orhouseholdpurposes).


34

N. EPPs Do Not Have Standing To Bring A ClaimUnder The Consumer Protection Law Of Massachusetts

Here, nonamedPlaintiffisaresidentofMassachusetts.EPPsinsteadrelyuponcertain

reimbursementsthatEPPsmadetotheirmemberswhoallegedlypurchasedClobetasolinthat

state.(See EPPCompl.¶¶37-38, 40-42, 44.) Thispivotisineffective, however, because

businessorganizations, likeEPPs, donothavestandingtobringindirectpurchaserantitrust

claimsunderMassachusettslaw.25 Thus, thiscourtshoulddismissEPPs’Massachusetts

consumerprotectionclaims.(See EPPCompl.¶297.)

VII. EPPS’ UNJUST ENRICHMENT CLAIMS FAIL AS A MATTER OF LAW

Liketheirstateantitrustandconsumerprotectionclaims, EPPs’unjustenrichmentclaims

alsofailasamatteroflaw forreasonsbeyondtheirfailuretosufficientlyallegeanunlawful

agreementtoraiseprices.

A. EPPs Cannot Use Unjust Enrichment AsAn “End Run” Around Illinois Brick

EPPspurporttobringunjustenrichmentclaimsunderthelawsof25statesthathavenot

repudiatedIllinois Brick’sprohibitionagainstindirectpurchaserdamagesactions.(See

AppendixG.) See In re Lidoderm Antitrust Litig., 103F.Supp.3dat1175(plaintiffs“cannot

makean‘endrun’aroundIllinois Brick byrelyingon[their]unjustenrichmentclaim forstates

25 Specifically, MassachusettsConsumerProtectionLaw, Chapter93A, includesaSection9whichappliestoconsumerswhoengageinatransactionfor“personalreasons,”andaSection11whichappliestobusinessesthatare“motivatedbybusinessconsiderations.” Frullo v. Landenberger, 814N.E.2d1105, 1112(Mass.App.Ct.2004).EPPsarebusinessentitiesthatmustseekreliefunderSection11, whichincludesaspecificprovisionrequiringthatanyactionbroughtunderthatsectionmustbeguidedbytheMassachusettsAntitrustAct, andbyassociation, IllinoisBrick.See Section11ofMass.Gen.L.ch.93A;In re Aggrenox Antitrust Litig., 2016W L4204478,at*8(quotingCiardi v. F. Hoffmann-La Roche, Ltd., 436Mass.53,57-58(2002)).Asaresult, courtshaveconsistentlyheldthatnon-consumerplaintiffs, likeEPPs, maynotmaintainacauseofactionunderMassachusetts’sconsumerprotectionlaw whentheconductisbasedonanantitrustclaim.See, e.g., In re Asacol Antitrust Litig., 2016W L4083333, at*13(dismissingMassachusettsconsumerprotectionlaw claim byHealthFundPlaintiffsbecauseSection11mustbeinterpretedconsistentwithIllinoisBrick);United Food & Commercial Workers Local 1776, 74F.Supp.3dat1086(concludingthatanemployeehealthandwelfareplanplaintiffhadnostandingunderChapter93A).


35

thatwouldallow unjustenrichmentclaimstoproceed”).26 Accordingly, EPPs’unjust

enrichmentclaimsunderthelawsofAlaska, Arkansas, Colorado, Connecticut, Delaware,

Florida, Georgia, Idaho, Illinois, Kentucky, Louisiana, Maryland, Massachusetts, Missouri,

Montana, New Jersey, Oklahoma, Pennsylvania, PuertoRico, RhodeIsland, SouthCarolina,

Texas, Virginia, W ashington, andW yomingmustbedismissed.(See EPPCompl.¶¶340, 342,

344-46, 348-49, 351-52, 355-56, 358-59, 363-64, 368, 373, 375-78, 381, 384-85, 388.)

B. A Number Of Jurisdictions Allow Unjust Enrichment ClaimsOnly Where EPPs Conferred A Direct Benefit On Defendants

TorecoverforunjustenrichmentunderthelawsofAlabama,27Arizona, theDistrictof

Columbia, Florida, Georgia, Idaho, Iowa, Kansas, Maine, Maryland, Massachusetts, Michigan,

Missouri, New Jersey, New York, NorthCarolina, NorthDakota, Pennsylvania, RhodeIsland,

SouthCarolina, Tennessee, Texas, Utah, W estVirginia, andW isconsin, aplaintiffmustconfera

benefitdirectlyonthedefendant.28 Here, theEPPComplaintdoesnotallegethatEPPsdirectly

26 See also TFT-LCD, 599F.Supp.2dat1191-92(allowingtheplaintiffsto“bringanunjustenrichmentclaimwhenthatsameclaim wouldbebarredunderstateantitrustlaw ...wouldallow plaintiffstocircumventlimitationsofstateantitrustlaw”);In re New Motor Vehicles, 350F.Supp.2dat211(concludingthat“itwouldsubvertthestatutoryschemetoallow thesesameindirectpurchaserstosecure, forthestatutoryviolation, restitutionaryreliefatcommonlaw (orinequity).”);In re Opana Er Antitrust Litig., MDLDocketNo.2580, CaseNo.14C10150, 2016W L4245516, at*2(N.D.Ill.Aug.11, 2016)(“AllowingEPPstomaintaintheirIllinoisandRhodeIslandunjustenrichmentclaimswouldenablethem tosidestepimpermissiblythosestates’prohibitionsonantitrustrecoveryforindirectpurchasers.”);In re Solodyn (Mino Hydrochloride) Antitrust Litig., 2015W L5458570,at*71-72(dismissingunjustenrichmentclaimsunderColorado, Connecticut, Delaware, Georgia, Kentucky, Maryland,Pennsylvania, SouthCarolina, Texas, andVirginiabecausethosestatesdonotpermitindirectpurchaserantitrustactions);In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig., 64F.Supp.3d665, 704(E.D.Pa.2014)(“StatesthathaveadoptedIllinoisBrickanddonotprovideacauseofactionundereitherthestates’antitrustlaw orconsumerprotectionlaw, are:Illinois, Kentucky, Massachusetts, MissouriandNew Jersey.Therefore, theseautonomousclaimsforunjustenrichmentwillbedismissed.”).

27 Inaddition, plaintiffsmaynotbring“autonomous”unjustenrichmentclaimsasanendrunaroundthefactthatplaintiffsdonothaveaviableclaim underAlabama’santitruststatutewheretheclaim doesnotinvolvepurelyintrastateconduct.Sheet Metal Workers Local 441 Health & Welfare Plan, 737F.Supp.2dat429(dismissingAlabamaunjustenrichmentclaim).

28 See AppendixH;see also, e.g., In re Aftermarket Filters Antitrust Litig., MDLNo.1957,2010W L1416259, at*2(N.D.Ill.Apr.1, 2010)(dismissingindirectpurchasers’unjustenrichmentclaimsunderKansas, Michigan, andNorthCarolinalaw becausetheydidnotconferadirectbenefitondefendant);Potash, 667F.Supp.2dat948(sameunderKansas, FloridaandMichiganlaw);In re Flonase Antitrust Litig., 692F.Supp.2dat544-46(sameunder


36

dealtwithorconferredadirectbenefitonanyDefendant.Infact, itallegestheexactopposite,

andexcludesdirectpurchasersofClobetasolfrom theputativeclasses.(See id.¶¶208, 230-31.)

Bydefinition, indirect purchasersdonotconferadirect benefitonanydefendant.EPPs’unjust

enrichmentclaimsunderthelawsoftheforegoingjurisdictionsfailontheirowntermsandmust

bedismissed.(See id.¶¶339, 341, 347-49, 351, 353-54, 357-60, 363, 368, 370-72, 375, 377,

378, 380-82, 386-87.)

C. Unjust Enrichment Is Not An Independent Cause Of Action In Some States

EPPs’claimsforunjustenrichmentunderthelawsofCalifornia, Mississippi, andNew

Hampshireshouldbedismissedfortheadditionalreasonthatthesestatesrecognizeunjust

enrichmentonlyasaremedy, notastandalonecauseofaction.29 (See id.¶¶343, 362, 367.)

Moreover, EPPs’unjustenrichmentclaim underIllinoislaw30isbasedonthesameallegationsas

theirclaim undertheIllinoisAntitrustAct, andthereforeshouldbedismissed.(See id.¶352.)

FloridaandNorthCarolinalaw);Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline, PLC,263F.R.D.205, 216(E.D.Pa.2009)(sameunderNew Yorklaw).

29 California:Smith v. Ford Motor Co., 462F.App’x660, 665(9thCir.2011)(affirmingdistrictcourt’sdismissalofCaliforniaunjustenrichmentclaim onbasisthat“unjustenrichmentisnotanindependentcauseofactioninCalifornia”);Hill v. Roll Int’l Corp., 128Cal.Rptr.3d109,118(Cal.Ct.App.2011)(“Unjustenrichmentisnotacauseofaction, justarestitutionclaim.”);Melchior v. New Line Prods., Inc.,131Cal.Rptr.2d347, 357(Cal.Ct.App.2003)(“[T]hereisnocauseofactioninCaliforniaforunjustenrichment.”).Mississippi:Cole v. ChevronUSA, Inc.,554F.Supp.2d655, 672-73(S.D.Miss.2007)(“UnderMississippilaw, unjustenrichmentisnotanindependenttheoryofrecovery.”).New Hampshire:Gen. Insulation Co. v. Eckman Canst., 992A.2d613,621(N.H.2010)(“[U]njustenrichmentgenerallydoesnotform anindependentbasisforacauseofaction.”).

30Theviabilityofanunjustenrichmentclaim asanindependentcauseofactionisunsettledinIllinois.See Niaspan,42F.Supp.3dat764(dismissingIllinoisunjustenrichmentclaim).ButevenifitwereviableunderIllinoislaw, anunjustenrichmentclaim that“restsonthesameimproperconductallegedinanotherclaim ...[]willstandorfallwiththerelatedclaim.”Krug v. Am. Family Mut. Ins. Co.,227F.Supp.3d942, 946(N.D.Ill.2016)(dismissingplaintiff’scomplaintwhereplaintifffailedtoestablishthathisunjustenrichmentclaim wasbasedonallegationsdistinctfrom theunderlyingICFA claim)(quotingCleary v. Philip Morris Inc., 656F.3d511,517(7thCir.2011));see also Martis v. Grinnell Mut. Reinsurance Co., 905N.E.2d920, 927-28(Ill.App.Ct.2009)(dismissingclaim forunjustenrichmentwhereunderlyingclaim undertheIllinoisConsumerFraudActwasinsufficient).


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D. Tennessee Requires EPPs To Plead Exhaustion Of Remedies

TorecoverforunjustenrichmentunderTennesseelaw, aplaintiffmustdemonstratethat

ithasexhaustedallremediesagainstthepartywithwhom itisinprivity.31 EPPshaveallegedno

factssuggestingthattheysoughttorecoverdamagesfrom theretailersfrom whom they

purchasedtheirproducts.Asaresult, EPPs’Tennesseeunjustenrichmentclaim mustbe

dismissed.(See id.¶380.)

E. Several States Require EPPs To PleadThat They Lack An Adequate Legal Remedy

EPPs’unjustenrichmentclaimsunderseveralstates’laws–includingArizona,

Minnesota, Montana, New Hampshire, New York, SouthDakota, Tennessee, andUtah–fail

becausetheyhavenotpledthattheylackanadequatelegalremedy.32

31 See D.R. Ward. Const. Co. v. Rohm & Haas Co., 470F.Supp.2d485, 509(E.D.Pa.2006)(dismissingTennesseeunjustenrichmentclaim becauseplaintiffsfailedtoallege“that, priortofilingsuitagainstdefendants,plaintiffspursuedremediesagainstthepartiesfrom whichplaintiffspurchasedproductscontaining”theallegedlyprice-fixedproduct).

32 Arizona:Community Guardian Bank v. Hamlin,898P.2d1005,1008(Ariz.Ct.App.1995)(citingCity of SierraVista v. Cochise Enter., Inc.,697P.2d1125, 1131(Ariz.Ct.App.1984))(theprima facie claim forunjustenrichmentincludestheelementofthe“absenceofanadequateremedyprovidedbylaw”).Minnesota:SouthtownPlumbing, Inc. v. Har-Ned Lumber Co., Inc.,493N.W .2d137, 140(Minn.1992)(“ItiswellsettledinMinnesotathatonemaynotseekaremedyinequitywhenthereisanadequateremedyatlaw.”);Kelley v. Call. of St. Benedict,901F.Supp.2d1123,1132-33(D.Minn.2012)(dismissingclaim forunjustenrichmentbecauseanadequatelegalremedywasavailable).Montana:N. Cheyenne Tribe v. Roman Catholic Church ex rel. Dioceses of GreatFalls/Billings, 296P.3d450, 457(Mont.2013)(noting, inthecontextofaconstructivetrust, “claim[s]forunjustenrichment...shouldbelimitedtosituationsinwhichnootherremedyexists.”).New Hampshire:E. Elec. Corp.v. FERD Canst., Inc.,No.CIV.05CV303JD, 2005W L3447957,at*2-3(D.N.H.Dec.15, 2005)(“EquitableremediesarenotavailableinNew Hampshirecourtswhentheplaintiffhasanadequatelegalremedy.”);ParsonsInfrastructure & Tech. Grp., Inc. v. Gilbane Bldg. Co., No.05-CV-01-PB, 2005W L2978901, at*1(D.N.H.Nov.7,2005)(dismissinganunjustenrichmentclaim whereplaintiffhadanadequatelegalremedy).New York:Samientov. World Yacht Inc., 883N.E.2d990, 996(N.Y.2008)(“Astoplaintiffs’thirdcauseofactionforunjustenrichment,thisactiondoesnotlieasplaintiffshaveanadequateremedyatlaw andthereforethisclaim waslikewiseproperlydismissed”).South Dakota:Rindal v. Sohler, 658N.W.2d769,772(S.D.2003)(“Anessentialelementtoequitablerelief”inSouthDakota“isthelackofanadequateremedyatlaw.”).Tennessee:Furlough v. Spherion AtlanticWorkforce, LLC, 397S.W .3d114,134(Tenn.2013)(holdingthatequitablereliefisunavailableunlessplaintiffcanshow “thereisnootheravailableoradequateremedy”).Utah:Am. Towers Owners Ass’n Inc. v. CCI Mech. Inc.,930P.2d1182,1193(Utah1996), abrogated in part on other grounds, Davencourt at Pilgrims LandingHomeowners Ass’n v. Davencourt at Pilgrims Landing, LC,221P.3d234, 252(Utah2009)(statingunjustenrichmentisnotavailableunderUtahlaw if“alegalremedyisavailable”fortheallegedmisconduct).


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EPPs’abilitytoarguethattheylackanalternativeremedyisunderminedbythefactthat

theyaresimultaneouslyassertingtheirrighttorecoveryunderstateantitrustandconsumer

protectionlaws(aswellasinjunctivereliefunderthefederalantitrustlaws).Moreover, the

unjustenrichmentclaimsshouldbebarredeveniftheCourtfindsEPPs’claimsunderanyorall

ofthesestatutesfail.See, e.g., Dooner v. Yuen, No.16-1939, 2016W L6080814, at*3(D.

Minn.Oct.17, 2016)(sinceplaintiff’s“breach-of-contractclaim –althoughnon-viable–

providedheranadequateremedyatlaw, herunjustenrichmentclaim fails.”).Accordingly,

EPPs’duplicativeunjustenrichmentclaimsmustbedismissed.(See EPPCompl.¶¶341, 361,

364, 367, 370, 379-80, 382.)

F. EPPs’ Unjust Enrichment Claims Under Illinois And South Carolina LawFail Because EPPs Have Not Alleged A Special Duty Owed By Defendants

EPPs’unjustenrichmentclaimsunderIllinoisandSouthCarolinalaw shouldbe

dismissedbecausethosestatesrequireaspecialdutybetweenplaintiffanddefendantasa

prerequisiteforliability.33 ThefailureofEPPstoallegeanysuchdutyherebetweenthemselves

andDefendantsmandatesdismissaloftheseclaims.(See EPPCompl.¶¶352, 378.)

G. EPPs May Not Avoid Alabama’s In-State Requirement ForAntitrust Claims By Bringing An Unjust Enrichment Claim

EPPs’unjustenrichmentclaim underAlabamalaw shouldbedismissedbecause

plaintiffsmaynotbring“autonomous”unjustenrichmentclaimsasanend-runaroundthein-

stateconductrequirementapplicabletoclaimsunderAlabama’santitruststatute.(See EPP

33 Illinois:Martis v. Grinnell Mut. Reinsurance Co., 905N.E.2d920,928(Ill.App.Ct.2009);see alsoPhiladelphia Indem. Ins. Co. v. Pace Suburban Bus Serv.,67N.E.3d556,570(Ill.App.Ct.2016)(“Foracauseofactionbasedonatheoryofunjustenrichmenttoexist, theremustbeanindependentbasisthatestablishesadutyonthepartofthedefendanttoact”andtherefore“aplaintifffailstostateacauseofaction...absentanallegationofduty.”).South Carolina:In re Microsoft Corp. Antitrust Litig., 401F.Supp.2d461, 464(D.Md.2005)(plaintiff“mustestablishtheexistenceofadutyowedtohim orherbythedefendant.”)(citingMyrtle Beach Hosp., Inc. v.City of Myrtle Beach, 532S.E.2d868,873(S.C.2000));see also Pitts v. Jackson Nat’l Life. Ins. Co., 574S.E.2d503,511-12(S.C.Ct.App.2002)(“[Plaintiff]failedtoestablishanydutytodiscloseorothercauseofactionthatwouldallow recoveryforunjustenrichment....Therewasnobreachoffiduciarydutyorfraudinvolved.”)


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Compl.¶339.) See Sheet Metal Workers Local 441 Health & Welfare Plan v. GlaxoSmithKline,

PLC, 737F.Supp.2d380, 429(E.D.Pa.2010).

VIII. MANY OF EPPS’ STATE LAW CLAIMS ARE TIME-BARRED

A numberofEPPs’statelaw claimsshouldbedismissedasuntimely.TheEPP

Complaintallegesthattheprice-fixingconspiracycommencedinJune2014(EPPCompl.¶¶3,

14, 88, 92-93, 230-31.) ThefirstcomplaintfiledintheSouthernDistrictofNew York, alleging

pricefixingwithrespecttoClobetasol, datestoSeptember15, 2016, wellovertwoyearsafter

theallegedconspiracytookplace.

Therefore, allstatelaw claimswithaoneortwoyearlimitationsperiodaretime-barred.

Thoseclaimsinclude:theantitrustclaim underAlabamalaw;consumerprotectionclaimsunder

Alaska, Montana, UtahandVirginialaw;andunjustenrichmentclaimsunderthelawsof

California, Oklahoma, Oregon, PuertoRicoandTexas.(See EPPCompl.¶¶256, 288, 301, 313,

315, 343, 373-74, 376, 381.) (See AppendixI.)34

Additionally, stateconsumerprotectionclaimsunderthelawsofColorado, Delaware,

andW isconsin, whichhaveathreeyearstatuteoflimitations, arealsotimebarred, sincenoneof

34 Inanattempttosalvagetheirtime-barredclaims, EPPsarguethatthelimitationsperiodsfortheirclaimsweretolledasaresultofDefendants’fraudulentconcealmentoftheirputativeprice-fixingconspiracy.(See EPPCompl.¶¶212-20.) Specifically, EPPscontendthatpriortoDefendants’disclosureoftheexistenceofgovernmentinvestigationsandsubpoenas, “noinformationinthepublicdomainoravailabletoPlaintiffssuggested...acriminalconspiracytofixpricesforClobetasol”(id. ¶212),norcouldtheyhave“discoveredtheconspiracyatanearlierdatebytheexerciseofreasonableduediligence”(id. ¶218).Thisargumentcannotwithstandscrutiny, sinceitissquarelycontradictedbytheirrepeatedallegationsthat, ascomparedtothe“stablepricingofprioryears”(id.¶92), inJune2014Defendants’Clobetasolpricesunderwenta“hugespike”(id.¶93), “jumpingasmuchas1,700%inonefellswoop”(id.¶183).EPPsdonotdenythatthese“extremeandunprecedented”priceincreases(id.¶3)werepublicinformation;indeed, EPPsadmitthattheyexperiencedthesepriceincreasesinrealtime.(See id.¶100(“Defendants’priceincreasesforClobetasolresultedincorrespondingpriceincreasestothepricespaidbyPlaintiffs...becauseincreasedW ACpricestranslatetoincreasesinthetransactionpricespaidbyEnd-Payers.”).) Moreover,EPPsaverthattherewerenopossibleinnocentexplanationforthis“drasticdeparture”(id.¶109)from priorpricelevels, since“[n]osignificantsellersenteredorlefttheClobetasolmarketbetweenJanuary2011and2014”(id.¶106).Thus, onthefaceoftheEPPComplaint, EPPswereputoninquirynotice–andthushadadutytoundertakeareasonableinvestigation–asofJune2014.See, e.g., Colo.Rev.Stat.§6-1-115(limitationsperiodforColoradoconsumerprotectionlaw beginstorun“withinthreeyearsaftertheconsumerdiscoveredorintheexerciseofreasonablediligenceshouldhavediscoveredtheoccurrenceofthefalse, misleading, ordeceptiveactorpractice”).


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theEPPshavepreviouslybroughtsuchclaimsagainstDefendantspriortothefilingofthe

ComplaintonAugust15, 2017, overthreeyearssincetheallegedconspiracycommenced.(See

EPPCompl.¶¶291-92, 317.) (See AppendixI.)

CONCLUSION

Fortheforegoingreasons, noneofEPPs’claimscansurviveamotiontodismiss.

Accordingly, theCourtshoulddismisstheEPPComplaint, initsentirety, withprejudice.

Dated:October6, 2017

/s/ Damon W. SudenWilliam A.EscobarDamonW.SudenKELLEY DRYE& WARREN LLP101ParkAvenueNew York,New York10178Tel:(212)808-7800Fax:(212)[email protected]@kelleydrye.com

Counsel for Defendants Wockhardt USA LLCand Morton Grove Pharmaceuticals Inc.

Respectfullysubmitted,

By:/s/Sheron KorpusSheronKorpusSethA.MoskowitzDavidM.MaxKASOW ITZBENSON TORRESLLP1633BroadwayNew York, New York10019Tel:(212)506-1700Fax:(212)[email protected]@[email protected]

Counsel for Actavis Holdco U.S., Inc.

/s/ Devora W. AllonJayP.Lefkowitz, P.C.DevoraW .AllonKIRKLAND & ELLISLLP601LexingtonAvenueNew York, NY 10022-4611Tel:(212)446-4800Fax:(212)[email protected]@kirkland.com

DouglasJ.Kurtenbach, P.C.KIRKLAND & ELLISLLP300NorthLaSalleChicago, IL60654Tel:(312)862-2000Fax:(312)862-22000

/s/ J. Douglas BaldridgeJ.DouglasBaldridgeLisaJoseFalesDanielleR.FoleyVenableLLP600MassachusettsAvenue, NWW ashington, D.C.20001(202)[email protected]@[email protected]

ThomasJ.W elling, Jr.BenjaminP.ArgyleVenableLLP1270AvenueoftheAmericas, 24thFloorNew York, New York10020


41

[email protected]

Counsel for Defendants Akorn, Inc. andHi-Tech Pharmacal Co., Inc.

(212)[email protected]@venable.com

Attorneys for Defendant Taro PharmaceuticalsU.S.A., Inc.

/s/ Saul P. MorgensternSaulP.MorgensternMargaretA.RogersAliceC.C.HulingARNOLD & PORTERKAYESCHOLERLLP250W est55thStreetNew York, New York10019Tel:(212)836-8000Fax:(212)[email protected]@[email protected]

LauraS.ShoresARNOLD & PORTERKAYESCHOLERLLP601MassachusettsAvenue, NWW ashington, DC20001Tel:(202)942-5000Fax:(202)[email protected]

AbbyL.Sacunas(200081)PeterM.Ryan(81816)COZEN O’CONNOR

1650MarketStreetPhiladelphia, PA 19103(215)665-4785(215)7012472(fax)[email protected]@cozen.com

/s/Scott A. StempelScottA.Stempel, Esq.J.ClaytonEverett, Jr., Esq.TraceyF.Milich, Esq.(Pa.ID No.316753)MORGAN, LEW IS& BOCKIUSLLP1111PennsylvaniaAvenue, NWW ashington, D.C.20004Phone:(202)739-3000Fax:(202)[email protected]@[email protected]

HarveyBartleIV, Esq.(Pa.ID No.91566)FrancisA.DeSimone,Esq.(Pa.ID No.320837)MORGAN, LEW IS& BOCKIUSLLP1701MarketStreetPhiladelphia, PA 19103Phone:(215)963-5000Fax:(215)[email protected]@morganlewis.com

Counsel for Defendant Perrigo New York, Inc.


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Counsel for Defendants Sandoz Inc. andFougera Pharmaceuticals Inc.


CERTIFICATE OF SERVICE

I hereby certify on this 6th day of October, 2017, a true and correct copy of the foregoing

was filed electronically, with redactions, pursuant to Section 2.4 of Pretrial Order No. 26 (16-

MD-2724, ECF 373), Section 2.3 of Pretrial Order No. 29 (16-MD-2724, ECF 414), and Section

9 of Pretrial Order No. 7 (16-MD-2724, ECF 121), and is available for viewing and downloading

from the Court’s ECF System. Notice of this filing will be sent to all counsel of record by

operation of the ECF System.

Moreover, a true and correct unredacted copy of the foregoing was served electronically

upon all counsel of record via electronic mail, and will be hand-delivered to the Court and Clerk

on the 10th day of October, 2017.

Dated: October 6, 2017

/s/ Sheron Korpus

Sheron Korpus


in the united states district court for the eastern ... · 3 (202) 344-4000 [email protected]...

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