Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-14-02318/USCOURTS-ca2-14-02318-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 

---

1

14‐2318‐cv

Sergeants Benevolent Ass’n v. Sanofi‐Aventis US

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term 2014

(Argued: June 25, 2015    Decided: November 13, 2015)

No. 14‐2318‐cv

––––––––––––––––––––––––––––––––––––

SERGEANTS BENEVOLENT ASSOCIATION HEALTH AND WELFARE FUND, NEW

ENGLAND CARPENTERS HEALTH BENEFITS FUND, ALLIED SERVICES DIVISION

WELFARE FUND,

Plaintiffs‐Appellants,

STATE OF LOUISIANA, CITIZENS OF THE STATE OF LOUISIANA, LOUISIANA

DEPARTMENT OF HEALTH AND HOSPITAL, AND ON BEHALF OF ALL OTHERS SIMILARLY

SITUATED, CHARLES C. FOTI, JR., IN HIS OFFICIAL CAPACITY AS THE ATTORNEY

GENERAL FOR THE STATE OF LOUISIANA AS PARENS PATRIAE ON BEHALF OF,

Plaintiffs,

‐v.‐ 

SANOFI‐AVENTIS U.S. LLP, SANOFI‐AVENTIS U.S., INC.,

Defendants‐Appellees.

––––––––––––––––––––––––––––––––––––

Before: CABRANES, LIVINGSTON, and DRONEY, Circuit Judges.

Appeal from the March 30, 2011 and May 12, 2014 orders of the United

States District Court for the Eastern District of New York (Sandra L. Townes,

Judge) denying Plaintiffs‐Appellants’ motion to certify a proposed class and

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page1 of 65
2

granting Defendants‐Appellees’ motion for summary judgment. Plaintiffs sought

to certify a class of health insurance plans that paid for prescriptions of

Defendants’ antibiotic drug Ketek, arguing that Defendants violated the

Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq., by

making misrepresentations that underplayed Ketek’s safety risks. Relying on our

decision in UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010), the

district court denied class certification, and later granted summary judgment to

Defendants, on the ground that Plaintiffs could not prove causation by

generalized evidence. We agree that, because Plaintiffs cannot show causation by

generalized evidence and have offered no individualized evidence, Plaintiffs’

claims may not be litigated as a class action, and Defendants were entitled to

summary judgment on Plaintiffs’ individual claims. Accordingly, we AFFIRM the

orders and the judgment below.

THOMAS SOBOL (Lauren Barnes and Jessica

R. MacAuley, on the brief), Hagens Berman

Sobol Shapiro, LLP, Cambridge, MA, for

Plaintiffs‐Appellees.

WILLIAM N. WITHROW JR. (Lindsey B. Mann

and J. Nick Phillips, on the brief), Troutman

Sanders LLP, Atlanta, GA, for Defendants‐

Appellees.

DEBRA ANN LIVINGSTON, Circuit Judge:

Plaintiffs‐Appellants are three health‐benefit plans (“HBPs”) that brought

suit under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.

§ 1961 et seq. (“RICO”), and various state laws, claiming that Defendants‐

Appellees sanofi‐aventis U.S. LLP and sanofi‐aventis U.S., Inc. (collectively,

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page2 of 65
3

“Aventis”) engaged in a pattern of mail fraud by failing to disclose the true risks

of the antibiotic drug telithromycin, marketed as “Ketek.” Plaintiffs sought to

certify a class of all HBPs that paid for Ketek prescriptions on the theory that

such HBPs were injured as a result of paying for Ketek prescriptions that would

not have been written if Aventis had not concealed Ketek’s safety risks. The

United States District Court for the Eastern District of New York (Sandra L.

Townes, Judge), denied Plaintiffs’ motion for class certification, relying on our

decision in UFCW Local 1776 v. Eli Lilly & Co., 620 F.3d 121 (2d Cir. 2010)

(“Zyprexa”), to hold that the individual decisions of prescribing physicians

thwarted Plaintiffs’ effort to prove class‐wide causation using generalized proof.

The district court subsequently granted Aventis summary judgment on all

claims, again citing Zyprexa and Plaintiffs’ inability to prove causation with

generalized evidence.  

Although we agree with Plaintiffs that Zyprexa does not foreclose class

certification for all RICO mail‐fraud claims brought against a drug manufacturer,

we nevertheless conclude that Zyprexa’s reasoning applies to this case, and bars

Plaintiffs’ attempt to certify a class. While it may be possible for a class of

plaintiffs to prove the causation element of a pharmaceutical fraud claim such as

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page3 of 65
4

this one with generalized proof, Plaintiffs have failed to offer such proof here.

Class certification was therefore correctly denied. Our class certification decision,

moreover, necessarily disposes of the summary judgment question as well: if

Plaintiffs’ RICO claims cannot be proved by generalized proof and Plaintiffs have

adduced no individualized proof (which they have not), Plaintiffs’ claims cannot

survive summary judgment. We also agree with the district court’s dismissal of

Plaintiffs’ state‐law claims. Accordingly, we affirm the district court’s orders

denying class certification and granting Aventis’s motion for summary judgment

on all claims.

BACKGROUND

A. Antibiotic Treatment Options for Respiratory Tract Infections

The human respiratory tract—comprising the sinuses, throat, and lungs—

is highly susceptible to invading microorganisms. These microscopic invaders

are the cause of the sniffling, sneezing, congestion, and coughing that most

laypeople identify as symptoms of “a cold” or “the flu.” The medical community

classifies such symptoms as those of either upper respiratory infections—the

common cold and sinusitis being the most common examples—or lower

respiratory infections—of which bronchitis and pneumonia are the most familiar.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page4 of 65
5

See Patrick R. Murray et al., Medical Microbiology 6‐7, 153‐54 (7th ed. 2013).

Respiratory tract infections may be caused by bacteria or by viruses; most cases

are caused by viruses. Ctrs. for Disease Control & Prevention, Get Smart: Know

When Antibiotics Work (What Everyone Should Know),

http://www.cdc.gov/getsmart/community/about/should‐know.html (last visited

Nov. 12, 2015) [hereinafter CDC, Get Smart].

Antibiotic drugs were first produced for widespread use in the 1940s, and

their discovery was one of the greatest medical advances in history. Ctrs. for

Disease Control & Prevention, About Antimicrobial Resistance,

http://www.cdc.gov/drugresistance/about.html (last visited Nov. 12, 2015)

[hereinafter CDC, Antimicrobial Resistance]. One of the first antibiotic drugs was

penicillin, which was a member of a class of antibiotics known as beta‐lactams.

Pneumonia: In‐Depth Report (Antibiotic and Antiviral Drug Classes), N.Y. Times,

http://www.nytimes.com/health/guides/disease/pneumonia/antibiotic‐and‐

antiviral‐drug‐classes.html (last visited Nov. 12, 2015). Other beta‐lactam

antibiotics include amoxicillin, which, with the addition of clavulanic acid, is

marketed under the name Augmentin. Id. In addition to the beta‐lactams, the

most common classes of antibiotic drug used to treat respiratory infections are

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page5 of 65
6

macrolide drugs, such as azithromycin (Zithromax) and clarithromycin (Biaxin),

and the most recent major class of antibiotics to come on the market,

fluoroquinolones. Id. All categories of antibiotic drug have their own benefits and

risks. Antibiotics in all categories, however, are only effective against bacteria,

and not against viral infections. Thus, because most respiratory tract infections

are viral in nature, most such infections are unaffected by antibiotics. CDC, Get

Smart.

   For a variety of reasons, doctors nonetheless frequently prescribe antibiotic

drugs to patients with respiratory tract infections, even if they have no evidence

that the infection in question is caused by a bacteria rather than a virus. This kind

of over‐prescription of antibiotic drugs, as well as the widespread use of

antibiotic therapies in general, has given rise to a phenomenon known as

antibiotic resistance. CDC, Antimicrobial Resistance. Antibiotic resistance occurs

when bacteria mutate to become impervious to the antibacterial action of a

particular antibiotic drug; this resistant bacterial strain then multiplies and

spreads, becoming more prevalent as antibiotic drugs wipe out its competitor

strains. Id. Many of the bacteria commonly responsible for respiratory tract

infections, such as Streptococcus pneumoniae, exist in strains that have developed

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page6 of 65
7

resistance to beta‐lactam antibiotics or to macrolide antibiotics. Ctrs. for Disease

Control & Prevention, Antibiotic Resistance Threats in the United States 79 (2013)

(“S. pneumonia has developed resistance to drugs in the penicillin and

erythromycin groups,” causing 19,000 excess hospitalizations and 7,000 deaths

every year.). Some strains have developed resistance to multiple classes of

antibiotic drugs: these are known as multi‐drug‐resistant strains, or MDRS.

Although the various classes of drugs used to treat respiratory infections

exhibit similar effectiveness and thus offer a similar benefit, each class has

different downsides. Beta‐lactams such as penicillin and amoxicillin are not

suitable for patients with penicillin allergies, and Augmentin (amoxicillin with

clavulanic acid) is a well‐known cause of liver injury. In addition, resistance to

both beta‐lactams and to macrolide antibiotics is high. Macrolides can cause

serious allergic reactions, impaired liver function, and sometimes‐fatal heart

problems. Fluoroquinolones can cause serious side effects in the central and

peripheral nervous system, and can cause heart problems. Although all

antibiotics can cause colitis by killing the normal, healthy microorganisms in a

patient’s body that protect us from the dangerous bacterium Clostridium difficile,

or C. dif, see Ctrs. for Disease Control & Prevention, Making Health Care Safer:

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page7 of 65
8

Stopping C. difficile Infections,

http://www.cdc.gov/vitalsigns/HAI/StoppingCdifficile/index.html (last visited

Nov. 12, 2015), fluoroquinolones are particularly prone to this effect, because

they attack a broader spectrum of bacteria, and thus kill more healthy gut

bacteria than other drugs. All antibiotic drugs can have dangerous side effects;

antibiotics are responsible for approximately twenty percent of all emergency

room visits for adverse drug events. CDC, Get Smart.

B. The FDA Approval Process for Ketek

1. Aventis’s Original Application for FDA Approval for Ketek

On February 28, 2000, Aventis submitted a New Drug Application

(“NDA”) to the Food and Drug Administration (“FDA”) seeking approval to sell

and market Ketek as a treatment for four types of respiratory infections: acute

bacterial sinusitis (“ABS”), acute exacerbation of chronic bronchitis (“AECB”),

tonsillopharyngitis, and community‐acquired pneumonia (“CAP”). In support of

the NDA, Aventis submitted data from in vitro testing of Ketek against various

bacteria in a controlled lab setting, data from animal testing, and data from small

human safety and efficacy trials. The in vitro data demonstrated that Ketek was

capable of killing strains of common bacterial pathogens that were resistant to

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page8 of 65
9

other antibiotics, including MDRS, though in vitro results cannot always be

replicated in clinical trials.

At the time when the FDA was considering the Ketek application, the FDA

used a non‐inferiority standard to assess the efficacy of antibiotic drugs in

treating respiratory tract infections. This means that the FDA accepted, as

conclusive proof of a drug’s effectiveness, trials demonstrating that a new drug

was no worse at treating a particular illness than existing, approved drugs—or,

at least, was not so much worse than existing drugs that it fell below a set

statistical threshold. The FDA did not require, and there was thus no incentive

for a manufacturer to conduct, studies comparing the effectiveness of the new

drug to the effectiveness of a placebo. In other words, manufacturers were

merely required to prove that their product was no worse than similar products,

even though—because minor respiratory infections like sinusitis and bronchitis

usually go away on their own even without medication—the FDA did not know

whether any of those similar products actually improved patient outcomes. This

odd situation arose mostly by historical accident: because antibacterial drugs

were discovered so long ago and represented such a major advance in treatment,

“antibacterial therapy was incorporated into clinical practice . . . before clinical

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page9 of 65
10

trial design had become more sophisticated.” J.A. 4448. There was also an ethical

concern regarding giving sick patients placebos instead of real drugs.

Aventis’s Ketek application was evaluated by the FDA’s Anti‐Infective

Drug Advisory Committee (“AIDAC”), a panel of experts tasked with assessing

an antibiotic drug’s risk/benefit profile and making an approval recommendation

to the FDA. The agency usually follows the recommendation of such a

committee, but it is not bound by it. On April 26, 2001, the AIDAC met and voted

to recommend limited approval of Ketek only for treatment of CAP—the most

serious of the four conditions considered. The committee also recommended that

further studies be performed to assess Ketek’s potential side effects, known in

the medical community as “adverse events.” Specifically, the AIDAC members

were concerned that Ketek might have serious but rare side effects that the small‐

scale clinical trials conducted thus far might not have revealed. Following this

meeting, the FDA sent Aventis a letter finding its application for CAP, AECB,

and ABS (though not tonsillopharyngitis) “approvable”—subject to the

performance of a large‐scale clinical study. Such a study would ideally reveal

rarer side effects that might not have appeared in trials of only a few hundred or

few thousand subjects. In other words, the study recommended by the AIDAC

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page10 of 65
11

would be a microcosm of what could be expected to happen if Ketek were

approved and entered the marketplace.

2. Study 3014

Aventis agreed to perform such a study, and enlisted Pharmaceutical

Product Development, Inc. (“PPD”) to create the study protocol for and oversee

the operation of what Aventis dubbed “Study 3014.” Study 3014 was designed to

enroll 24,000 patients, half of whom would be treated with Ketek, and half of

whom would be treated with Augmentin. Patients were to be randomly assigned

to one or the other drug. PPD was charged with recruiting physicians, who

would be paid $400 for every patient of theirs who completed the study. The

study required that each patient be diagnosed with ABS, AECB, or CAP at an

initial appointment, at which baseline labs would be drawn and one of the two

study medications would be prescribed. The protocol then required two follow‐

up visits.

Study 3014 was a fiasco. Dr. David Ross, who was the primary FDA safety

reviewer responsible for review of Ketek, testified before a congressional hearing

that the fraud in Study 3014 was “unprecedented . . . at this scope and scale.” J.A.

4213. “[O]ut of 10 [study] sites that were inspected [by the FDA], all had serious

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page11 of 65
12

problems that made their data completely unreliable. . . . [E]very single one was

found to have significant violations of what are called Good Clinical Practices,

the rulebook for conducting clinical trials. Four of the 10—40 percent—were

referred for criminal investigation.” Id. Most egregiously, the study’s largest

enroller by far—Dr. Anne Kirkman‐Campbell, who enrolled 407 patients—

fabricated data on a vast scale. In the end, FDA investigators determined that she

had only administered the study drugs to fifty patients, and that the other 350

patients were fictitious. Another study site regularly failed to report adverse

events, while yet another site submitted suspiciously similar records for multiple

subjects, including nearly identical blood test results. A site that enrolled 160

patients was run by a doctor who was ignorant of the study guidelines or the

Good Clinical Practices rules, “argumentative about complying with the

guidelines,” and “[un]interested in learning about” them. J.A. 3798‐99.

As a result of this widespread fraud and incompetence, the FDA Division

of Scientific Investigations (“DSI”) concluded that “[t]he integrity of data from all

sites involved in Study 3014 cannot be assured with any degree of confidence.”

J.A. 643. “[I]f these sites, which were high‐enrolling sites, where supposedly the

company had been keeping close tabs on the doctors, were unreliable, the rest of

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page12 of 65
13

the sites couldn’t be relied on either.” J.A. 4213. Ultimately, because “the

integrity of data from all of the 1,800 investigative sites . . . could not be assured,”

the FDA “did not rely on those data to take a regulatory action.” J.A. 4539; see

also J.A. 4387 (“Although the FDA did not rely on study 3014 to support

approval, we reviewed the study for safety findings that would have counted

‘against the drug,’ as is consistent with good review practice.”). Thus, Study

3014’s ultimate conclusion—that Ketek was comparable to Augmentin in safety

and effectiveness—was worthless.

3. FDA Approval of Ketek

On July 24, 2002—before the FDA had reason to suspect fraud in Study

3014—Aventis filed its amended NDA, including data from Study 3014, and

post‐marketing safety data from countries in Europe and South America, where

Ketek had already been approved for sale. Aventis’s report about Study 3014

omitted any mention of the study’s data integrity problems. On October 15, 2002,

DSI began its investigation of Dr. Kirkman‐Campbell’s involvement in Study

3014, which led swiftly to discovery of her fraud.  

On January 8, 2003, the AIDAC met for a third time to discuss the Ketek

application. The committee was missing crucial information, however—the FDA

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page13 of 65
14

did not reveal to the AIDAC members any information relating to DSI’s ongoing

investigation of Study 3014. Unaware of the unreliability of Study 3014’s results,

the AIDAC recommended that the FDA approve Ketek for ABS, AECB, and CAP.

The FDA, armed with the information the AIDAC lacked, did not accept the

committee’s recommendation, but instead requested additional information from

Aventis concerning both Study 3014 and post‐marketing safety data from

countries where Ketek was already in use.

Finally, on April 1, 2004, the FDA approved Ketek for three indications:

ABS, AECB, and CAP. Because the agency was aware that Study 3014 was

unreliable, and Aventis had conducted no other large‐scale safety studies, the

FDA relied almost entirely on post‐marketing safety reports from other countries

in approving the drug. This was highly unusual. See J.A. 4231 (Dr. David

Graham, associate director for science and medicine in FDA’s Office of

Surveillance and Epidemiology, testified that he could not “think of a single

other example where FDA used such data as the primary basis for the approval

of a drug[‘s] safety.”).

At congressional hearings later convened on the topic of Ketek’s approval,

witnesses put forth different explanations for the FDA’s decision. Dr. Ross

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page14 of 65
15

pointed to “a culture of approval” at the FDA, J.A. 4199, and “a fear of being seen

as holding up new products,” J.A. 4220. Dr. John Powers, former lead medical

officer for antimicrobial drug development at the FDA, noted that there were

“economic issues regarding antibiotic development that were pressuring FDA

from the outside”—namely, drug companies “had decided to stop antibiotic

discovery” because the market for antibiotics is flooded with generic

competitors, and because antibiotics are not as lucrative as drugs like

antidepressants or statins, which are taken continuously for months or years. J.A.

4200‐02. This slowdown in the development of new antibiotic drugs, according to

Dr. Powers, was especially dangerous given the need for new drugs to replace

older antibiotics to which antibiotic resistance had developed. In this

environment, “if [the] FDA made any moves to increase the rigor of scientific

studies in the area of antibiotics,” there was a fear that “it would be perceived as

a . . . disincentive” to the development of new drugs. J.A. 4201. Dr. Andrew von

Eschenbach, then‐commissioner of the FDA, testified that Ketek’s approval was

based on “the need for newer, more effective antibiotics” to “overcome

resistance” and add to the “antibiotic armamentarium.” J.A. 4298.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page15 of 65
16

The label agreed upon by Aventis and the FDA for Ketek noted that there

was some risk of liver failure associated with the drug, but this information was

not included in the “Warnings” section, nor was any indication included therein

that Ketek should not be prescribed to patients with a history of liver problems.

J.A. 3934‐35. No information from Study 3014 appeared on the Ketek label. The

FDA’s approval of Ketek, like FDA approval of any other drug, see Zyprexa, 620

F.3d at 127, permitted doctors to prescribe Ketek not only for its approved

indications (ABS, AECB, and CAP), but also for any other disease or symptom

for which an individual physician thought it might be effective. Prescription of a

drug for an indication other than the indications approved by the FDA is called

“off‐label” prescription or “off‐label” use. Id.  

C. Ketek in the Marketplace

1. The Marketplace for Antibiotic Drugs

A prescription for antibiotic drugs, like any prescription, involves three

main actors: the patient, who takes the medication and often assumes some share

of the cost; the doctor, who prescribes the drug but is not involved with the

financial side of the prescription; and the payer, who covers the majority of the

drug’s cost. For insured patients, the payer is a health‐benefit plan (“HBP”),

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page16 of 65
17

which pays whatever cost the patient’s co‐pay does not cover. Plaintiffs in this

case are all HBPs. Most HBPs contract out their prescription drug benefit

coverage to pharmacy benefit managers (“PBMs”), and all three named plaintiffs

here did so. PBMs manage approximately seventy‐five percent of all outpatient

prescription drug claims, and the three largest PBMs—Medco, Caremark, and

Express Scripts—handle about two‐thirds of those claims, or about half of all

retail prescriptions.

Most PBMs use formularies to outline which drugs are covered by a

particular plan and what type of coverage each drug receives. Many formularies

are “tiered,” often using a three‐tier system which separates generics (Tier 1),

“preferred” brand name drugs (Tier 2), and “non‐preferred” brand name drugs

(Tier 3). J.A. 1138‐39. Tier 1 drugs require the smallest co‐pay, and may even be

free, while Tier 2 and Tier 3 drugs will be progressively more expensive for the

patient. J.A. 68. Formularies may also place freestanding restrictions on their

coverage of a drug—for example, they may refuse to cover a particular drug until

a preferred alternative has been tried, and has failed. It is rare for a PBM to

remove an FDA‐approved drug from its formulary, although PBMs regularly

move particular drugs up or down a tier based on new information about a drug.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page17 of 65
18

Although HBPs implement tiered formularies and otherwise classify drugs

in order to incentivize patients to request cheaper, safer, and more effective

drugs over more expensive, dangerous, or ineffective ones, the ultimate decision

regarding which drug will be prescribed to a patient rests entirely with the

patient’s doctor. The parties to this case agree that a variety of factors contribute

to a physician’s decision, including both patient‐specific factors and the

physician’s own experience with, and knowledge about, the various options.

Those factors include, in the case of antibiotics: the patient’s age and sex, the

possibility of pregnancy, drug allergies, success of prior courses of treatment in

this patient, other medications the patient is taking, other illnesses the patient is

experiencing, family history, drug compliance tendencies (whether the patient is

likely to take and finish the course of treatment as prescribed), patient

preferences, side effects from previous antibiotics, the likelihood of antibiotic

resistance in the patient, the profile of antibiotic resistance in the region, and, of

course, the drug’s safety and efficacy.  

There are many antibiotic drugs available to treat respiratory tract

infections, including AECB, ABS, and CAP. As discussed above, each class of

drug, and each individual drug within that class, comes with its own particular

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page18 of 65
19

risks and benefits, including the type and severity of potential side effects, the

existence of resistant organisms, and whether the drug targets a broad or narrow

spectrum of bacteria. Ketek’s competitors also vary significantly in cost.

Zithromax, in the timespan shortly after Ketek’s entrance into the market, cost

$39.54 for a full course of therapy, while Levaquin (a fluoroquinolone) cost $62.09

for a course of treatment for AECB and $124.18 for a course of treatment for ABS.

Amoxicillin clavulanate cost $75.77 for a full course of therapy for both diseases.

Generic competitors like penicillin cost much less. Ketek was priced close to

Zithromax, which Aventis considered its main competitor: $46.15 per course of

therapy for both ABS and AECB.  

Following FDA approval, HBPs placed Ketek on their formularies. At the

time relevant to this action, two of the named plaintiffs, New England

Carpenters Health Benefits Fund (“NEC”) and Allied Services Division Welfare

Fund (“ASD”), employed a three‐tiered formulary; Sergeants Benevolent

Association Health and Welfare Fund (“SBA”), the third named plaintiff, did not

employ a tiered formulary at all. It is not clear in which tier ASD’s PBM classified

Ketek during the relevant time period; all that is known is that, as of March 2010,

ASD’s PBM listed Ketek as “Tier 2,” which is the tier for preferred brand‐name

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page19 of 65
20

drugs. NEC covered Ketek at Tier 2 until December 2006, at which point it

moved Ketek to Tier 3. SBA, which does not employ a tiered formulary, has

covered Ketek at the same level from the time of its original FDA approval

through the date of the district court’s summary judgment decision.

2. Ketek’s Market Performance

After FDA approval in April 2004, Ketek entered the market in July 2004

and became an immediate commercial success. Even though Ketek only became

available halfway through the year, Ketek was prescribed 859,696 times in 2004.

Ketek sales grossed $209 million in 2005 alone, and Dr. Ross estimated that, in

2006, a Ketek prescription was written “every four or five seconds.” J.A. 4202.

CAP represented only eight percent of Ketek prescriptions; the rest were for ABS,

AECB, or off‐label indications.

Ketek entered a market that was in a significant state of flux. Zithromax,

the market leader, and the drug that Aventis considered Ketek’s true rival, was

scheduled to go off‐patent in the fourth quarter of 2005. Biaxin, another popular

macrolide antibiotic, was scheduled to go generic in the second quarter of 2005.

Cefzil, a less popular competitor, was going off‐patent in the third quarter of

2005, and Levaquin and Tequin, two of the first fluoroquinolone drugs, were

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page20 of 65
21

scheduled to go off‐patent in 2007. In other words, Ketek entered a market which

was dominated by brand‐name drugs facing off against other brand‐names, but

which likely would not remain that way for long. Ketek had to be able to

compete even when its most popular rivals became cheaper and more widely

available than ever before.

Ketek’s sales peaked in the winter months and dropped in the summer

months, which is typical for drugs treating seasonal illnesses like sinusitis and

pneumonia. After the peak sales of winter 2005‐06, however, sales dropped much

more steeply than they had following the first winter peak in 2004‐05; sales

ultimately fell to about 60,000 prescriptions in July 2006, far below the July 2005

low of about 140,000 prescriptions.  Ketek’s numbers then began to rise again, as

expected in the fall and winter, but on a much smaller scale. Indeed, Ketek’s peak

for the 2006‐07 winter was only about 130,000 prescriptions—lower than Ketek’s

summer 2005 “low” of about 140,000. In short, Ketek’s sales took an

unmistakable dive starting in early‐to‐mid‐2006. The reason or reasons for this

precipitous decline are intensely disputed by the parties.

3. Ketek’s Post‐Marketing Safety History

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page21 of 65
22

The FDA maintains a publicly available database of spontaneous reports of

adverse drug reactions, known as the Adverse Event Reporting System, or

“AERS.” In March 2005, slightly less than a year after Ketek was approved, the

FDA Center for Drug Evaluation and Research asked the Division of Drug Risk

Evaluation (“DDRE”) to evaluate reports appearing in AERS related to Ketek —

specifically, reports of “visual disturbances, automobile accidents, liver events,

and syncope/loss of consciousness.” J.A. 2230. After assessing the AERS reports

in detail and determining that a number of the reported hepatic adverse events

were caused by something other than Ketek, DDRE concluded that the hepatic

adverse event reports were “consistent with those seen prior to approval in

worldwide experience and as described in the current labeling.” Id. DDRE

recommended only “including a statement in the PRECAUTIONS section [of the

Ketek label], following the current statement about hepatic dysfunction, that the

hepatic dysfunction may be severe (as [was] currently stated in [other parts of the

label]).” Id.

By the end of January 2006, Ketek had been prescribed approximately four

and a half million times, and ten cases of serious hepatic adverse events closely

associated with Ketek had been reported to AERS, including two deaths. On

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page22 of 65
23

January 20, 2006, the medical journal Annals of Internal Medicine published a

short article describing a cluster of three Ketek‐associated hepatic adverse events

that occurred in North Carolina. All three patients were previously healthy; one

patient died, one spontaneously recovered, and one required a liver transplant.

On the same date that the article was published online, and prompted by the

publication of said article, the FDA issued a Public Health Advisory regarding

Ketek. The Public Health Advisory affirmed that earlier studies had suggested

“that the risk of liver injury with [Ketek] was similar to that of other marketed

antibiotics,” but nevertheless recommended that healthcare providers “monitor

patients taking [Ketek] for signs or symptoms of liver problems.” J.A. 3984‐85.

The year 2006 saw a spike in reports of hepatic adverse events associated

with Ketek. The six months from January 2006 to June 2006 saw twenty‐five cases

of serious hepatic side effects reported as associated with Ketek—more than

twice as many as had been reported in the entire eighteen months that Ketek had

previously been on the market.    The six months from June 2006 to December

2006 saw an additional eighteen reported serious adverse hepatic events, for a

total of fifty‐three such events since Ketek came on the market. DDRE noted in

an October 2006 report on Ketek that “the rising trend of reporting rates

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page23 of 65
24

associated with [Ketek] is of concern,” J.A. 3855, but also noted that the rise in

reporting of hepatic events associated with Ketek was potentially “stimulated”

reporting prompted by the Annals of Internal Medicine article in January 2006,

J.A. 3866. Stimulated reporting occurs when press coverage of a particular

adverse event associated with a drug prompts healthcare providers to notice and

report similar drug‐event pairings with greater frequency; when it occurs, this

phenomenon makes it difficult to compare reporting rates for different drugs,

because a higher reported rate of liver failure associated with one drug as

opposed to another may simply reflect greater public salience rather than greater

risk. The October 2006 DDRE report noted that the domestic reporting rate for

Ketek‐associated serious hepatic adverse events was 23 per 10 million

prescriptions and recommended “consideration of regulatory actions for [Ketek]

such as restricted use for only patients who have failed other antibiotic

treatments or even market withdrawal.” J.A. 3869. On June 29, 2006, Aventis

(with the FDA’s approval) changed Ketek’s label to include additional warnings

about liver toxicity and sent a Dear Healthcare Professional letter to prescribers

alerting them to the change. On the same date, the FDA issued a press release

cautioning that many antibiotics may pose a risk of liver failure, and that “as

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page24 of 65
25

drug usage becomes more widespread, it is expected that rare adverse events

may be detected or reported in greater numbers.” J.A. 3061‐62. On September 12,

2006, the AIDAC voted to reject an NDA for the fluoroquinolone gemifloxacin,

targeted at ABS, in part because clinical trials demonstrated only non‐inferiority;

the manufacturer could not prove that gemifloxacin was more effective than a

placebo. On October 23, 2006, the FDA effectively announced a new superiority

requirement for antibiotic trials by rejecting an NDA for another anti‐infective

aimed at respiratory infections, faropenem, and raising no safety concerns but

instead advising the manufacturer to conduct superiority trials.

D. FDA Withdrawal of Approval

In December 2006, the FDA convened a joint meeting of the AIDAC and

the Drug Safety and Risk Management Advisory Committee (“DSRMAC”) to

consider whether the agency should (1) withdraw, limit, or modify Ketek’s

approval for some or all of its three indications; (2) require changes to Ketek’s

label; or (3) issue an official restriction on Ketek’s use. The meeting included both

voting and non‐voting attendees, and those voting included members of both

committees, as well as Special Government Employee Consultants and Federal

Employee Consultants. The attendees voted, inter alia, on the specific question,

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page25 of 65
26

“If superiority studies are conducted with Ketek, would that be sufficient

evidence to support [the conclusion that] benefit outweighs risk?” J.A. 4395‐96.

The meeting’s introductory comments, delivered by the Director of the

FDA’s Office of Surveillance and Epidemiology, Dr. Gerald Dal Pan, noted

“concerns that non‐inferiority trials cannot determine if the observed clinical

success rate” of drugs treating respiratory infections “is due to the drug or to the

natural history of the condition.” J.A. 4432‐33. Similar concerns about the

continued viability of non‐inferiority trials recurred throughout the meeting. The

meeting also featured an FDA statistical analysis of the Ketek‐related reports

appearing in AERS, which concluded that Ketek displayed a “fairly high”

propensity to cause hepatic failure but noted that its propensity to cause both

hepatic failure and hepatitis was statistically similar to that of another leading

antibiotic drug, Augmentin. J.A. 4664‐65. An epidemiological analysis of Ketek’s

connection to hepatic adverse events by the FDA’s Office of Surveillance and

Epidemiology concluded that the “reporting rate for [Ketek]‐associated [liver

failure] . . . was found to be similar to . . . reporting rates for selected comparators

[in the quinolone family] . . . given variation inherent in spontaneous adverse

event reporting.” J.A. 4753.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page26 of 65
27

Regarding the deficiencies of Study 3014, one attending consultant

remarked that, although “[m]uch has been made . . . out of the fact” that Study

3014 had been improperly conducted and could not be considered in connection

with Ketek’s risks, “a clinical trial . . . is not a great way to get an answer to a

question that involves a very low event rate,” because “for the event rates we are

talking about, a 24,000‐patient trial isn’t going to show much.” J.A. 4844‐45.

Another attendee agreed, asking, “how much power would a study of 12,000

patients exposed to [Ketek] . . . [have] to tell us about liver injuries that are

occurring at” a “potential rate of 1 in 20,000 to 1 in 30,000.” J.A. 4848. A third

attendee pointed out that “one other major limitation to clinical trials in terms of

safety data . . . is that the majority of clinical trials . . . don’t enroll very sick

people,” which is precisely the group of patients most likely to develop adverse

drug reactions once a drug is prescribed widely in the general population. J.A.

4854‐55.

At the end of the meeting, the attendees voted to withdraw Ketek’s

approval for ABS and AECB. Asked to state their rationale along with their votes,

a number of members cited safety concerns, explaining that they would “need to

know more about the risks” before allowing Ketek back on the market, J.A. 2277,

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page27 of 65
28

or that they were “concerned about the possibility that the level of toxicities we

see right now may herald an increasing prevalence that may occur in the future,”

J.A. 2284. But many members cited effectiveness instead, noting that, in the

absence of superiority trials, Ketek might well be no better than a sugar pill.

Several attendees expressly explained their votes in terms of the shift from non‐

inferiority trials to superiority trials. Two attendees voted to continue Ketek’s

approval based on fairness concerns, arguing that Ketek and its competitors had

been approved when non‐inferiority trials were considered acceptable, and that

it was “unfair to single out a single drug company because we have shifted the

playing grounds.” J.A. 2280. Finally, the voting attendees unanimously voted

“Yes” on the question “If superiority studies are conducted with Ketek, would

that be sufficient evidence to support [the conclusion that] benefit outweighs

risk?” J.A. 4396.

The FDA accepted the attendees’ recommendation that Ketek’s approval

for ABS and AECB be withdrawn, and that Ketek continue to be approved for

CAP. The attendees also recommended that Ketek’s label be amended with a

“black box warning” and expressed concern that foreign postmarketing data

indicated that Ketek exacerbated the rare neurological disorder myasthenia

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page28 of 65
29

gravis in patients already suffering from the disease, resulting in hospitalization

and sometimes death. The black box warning ultimately added to Ketek’s label

in 2007 indicated that “Ketek is contraindicated in patients with myasthenia

gravis” and referenced this data. Shortly after learning of the agency’s decision,

Aventis decided to terminate its rebate contracts1 for Ketek and to stop

promoting Ketek in the United States.  

The withdrawal of Ketek’s approval for ABS and AECB took effect on

February 9, 2007. On February 13, 2007, the House Energy and Commerce

Subcommittee on Oversight and Investigations began hearings on the FDA’s

drug‐approval process, focused in large part on the FDA’s decision to approve

Ketek, the widespread fraud in Study 3014, antibiotic resistance, and the issue of

non‐inferiority versus superiority trials for drugs that address self‐resolving

infections like ABS and AECB. Ketek’s domestic sales, already declining,

continued their downward trend after the withdrawal. Ketek is still available for

sale in the United States, but is rarely prescribed here. Sales remain brisk abroad.  

E. Procedural History

                                              

1 Rebate contracts are agreements through which drug manufacturers provide financial rebates to PBMs

either to gain access to a particular formulary tier or as an incentive to increase a drug’s market.  

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page29 of 65
30

Plaintiffs filed the original complaint in this action on January 14, 2008,

alleging violations of state consumer protection laws and unjust enrichment.2 On

June 4, 2008, Plaintiffs filed a second amended complaint, alleging for the first

time a substantive RICO violation under 18 U.S.C. § 1962(c) and a RICO

conspiracy in violation of 18 U.S.C. § 1962(d). The substantive RICO claim

alleged that the “association‐in‐fact” between Aventis and PPD, the supervisor of

Study 3014, constituted a criminal enterprise with a common purpose to enable

Aventis “to fraudulently represent that Ketek had valid regulatory approval for

broad antibiotic uses.” Special App. 69. The predicate acts alleged were mail

fraud, wire fraud, tampering with witnesses, and use of interstate facilities to

conduct unlawful activity. Id. Plaintiffs sought class‐wide refund damages of

$195.1 million and class‐wide unjust enrichment damages of $224 million. If

Plaintiffs’ RICO claims were successful, they stood to recover treble damages of

nearly $600 million, not including any recovery for unjust enrichment.

In May 2010, Plaintiffs moved to certify a class including all HBPs that

paid or incurred costs for Ketek between April 1, 2004, when the drug received

                                              

2 The State of Louisiana and its instrumentalities were also originally named as

plaintiffs in the complaint, but they voluntarily dropped out of the litigation on May 21,

2008.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page30 of 65
31

FDA approval, and February 12, 2007, when it lost such approval for ABS and

AECB. Plaintiffs argued, inter alia, that Ketek was so dangerous that no physician

would have prescribed Ketek if Aventis had not concealed its true safety risks;

every Ketek prescription, according to Plaintiffs, was thus traceable to Aventis’s

alleged fraud. Magistrate Judge Ramon Reyes issued a Report and

Recommendation recommending that class certification be denied because

Plaintiffs could not establish through generalized proof that Aventis’s alleged

RICO violations caused Plaintiffs’ injuries. Sergeants Benevolent Ass’n Health &

Welfare Fund v. Sanofi‐Aventis U.S. LLP, No. 08‐cv‐0179 (SLT) (RER), 2011 WL

824607 (E.D.N.Y. Feb. 16, 2011) (“Sergeants I”). Judge Reyes reasoned that this

case is virtually identical to Zyprexa, in which this Court held that RICO claims

brought by HBPs against Eli Lilly (“Lilly”) under the theory that Lilly

misrepresented Zyprexa’s safety and efficacy were not susceptible to generalized

proof, because physicians’ individual treating decisions disrupted the causal

chain. Id. at *15. That Report and Recommendation was adopted by the district

court on March 30, 2011. Sergeants Benevolent Ass’n Health & Welfare Fund v.

Sanofi‐Aventis U.S. LLP, No. 08‐cv‐0179 (SLT) (RER), 2011 WL 1326365 (E.D.N.Y.

Mar. 30, 2011) (“Sergeants II”).    Plaintiffs petitioned this Court for immediate

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page31 of 65
32

appeal of the class certification decision, but their petition was denied on July 28,

2011.

On December 22, 2011, Aventis moved for summary judgment with respect

to all four causes of action alleged in the second amended complaint, arguing

that Plaintiffs could not prove causation under RICO or prove that they suffered

an injury, and arguing that Plaintiffs’ state‐law claims failed because Plaintiffs

could not prove a violation of any of the state consumer protection statutes listed

in the second amended complaint or make out an unjust enrichment claim under

the law of their home states. On January 4, 2012, the district court again referred

the matter to Magistrate Judge Reyes, who recommended that Aventis’s motion

for summary judgment be granted in its entirety. Sergeants Benevolent Ass’n

Health & Welfare Fund v. Sanofi‐Aventis U.S. LLP, No. 08‐cv‐0179 (SLT) (RER), 2012

WL 4336218 (E.D.N.Y. Sept. 17, 2012) (“Sergeants III”).

On May 12, 2014, the district court adopted Judge Reyes’s Report and

Recommendation except to the extent that Judge Reyes recommended limiting

the state‐law causes of action to claims brought pursuant to the laws of Plaintiffs’

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page32 of 65
33

home states.3 Sergeants Benevolent Ass’n Health & Welfare Fund v. Sanofi‐Aventis

U.S. LLP, 20 F. Supp. 3d 305 (E.D.N.Y. 2014) (“Sergeants IV”). The district court

expressed concern that “the causal connection between [Aventis]’s alleged

wrongdoing and Plaintiffs[’] injury might be too attenuated to meet RICO’s

[proximate] causation requirement,” but ultimately based its causation holding

on Zyprexa’s statements to the effect that physicians’ prescribing decisions are too

independent to allow proof of causation through generalized proof. Id. at 327.

The district also held that, “[e]ven assuming that the decline in Ketek sales was

caused exclusively by safety considerations, one cannot use generalized proof to

determine the injury to Plaintiffs caused by [Aventis]’s misconduct,” because

Plaintiffs could not prove which antibiotics would have been prescribed in the

place of Ketek and whether those drugs would have been less expensive than

Ketek. Id. at 327‐28.

Regarding Plaintiffs’ state‐law claims, as relevant here, the district court

held that: (1) Plaintiffs’ claims under New York General Business Law § 349(a),

Massachusetts General Law chapter 93A, and the Illinois Consumer Fraud and

                                              

3 Plaintiffs subsequently chose to dismiss their claims brought pursuant to the

laws of sixteen other states in order to permit the immediate appeal of the district

court’s summary judgment decision.  

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page33 of 65
34

Deceptive Business Practices Act all failed because Plaintiffs could not prove that

they suffered an injury as a result of Aventis’s actions; (2) that Plaintiffs’ Illinois

unjust enrichment claim failed because Plaintiffs have an adequate remedy at

law; and (3) that Plaintiffs’ Massachusetts and New York unjust enrichment

claims failed because it was not inequitable for Aventis to retain the money it was

paid in exchange for an antibiotic that provided value to patients by effectively

treating their diseases. Id. at 334‐37; 339‐40. Plaintiffs timely appealed both the

class certification and the summary judgment orders.

DISCUSSION

We review a district court’s denial of class certification for abuse of

discretion. To the extent that the court’s decision was based on conclusions of

law, we review such conclusions de novo, and to the extent that its decision was

based on findings of fact, we review such findings for clear error. See Zyprexa, 620

F.3d at 130‐31. Our review of a district court’s denial of summary judgment is de

novo. Id. Summary judgment is properly granted if “there is no genuine dispute

as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page34 of 65
35

I.

Plaintiffs seek class certification under Federal Rule of Civil Procedure

23(b)(3). They must therefore demonstrate, inter alia, that “questions of law or

fact common to class members predominate over any questions affecting only

individual members.”4 Fed. R. Civ. P. 23(b)(3). “Class‐wide issues predominate if

resolution of some of the legal or factual questions that qualify each class

member’s case as a genuine controversy can be achieved through generalized

proof, and if these particular issues are more substantial than the issues subject to

individualized proof.” Zyprexa, 620 F.3d at 131 (quoting Moore v. PaineWebber,

Inc., 306 F.3d 1247, 1252 (2d Cir. 2002)).

Plaintiffs’ claim is brought under RICO § 1964(c). To prevail on such a

claim, a plaintiff must show “(1) a substantive RICO violation under § 1962;

(2) injury to the plaintiff’s ‘business or property;’ and (3) that such injury was ‘by

reason of’ the substantive RICO violation.” City of New York v. Smokes‐Spirits.com,

                                               4 In every case, a plaintiff seeking to certify a class must also satisfy all the

prerequisites listed in Rule 23(a). See Fed. R. Civ. P. 23(a) (requiring (1) that the “class

[be] so numerous that joinder of all members is impracticable,” (2) that “there are

questions of law or fact common to the class,” (3) that “the claims or defenses of the

representative parties are typical of the claims or defenses of the class,” and (4) that “the

representative parties will fairly and adequately protect the interests of the class”). The

parties and the district court agree that the Rule 23(a) factors are met here.  

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page35 of 65
36

Inc., 541 F.3d 425, 439 (2d Cir. 2008), rev’d on other grounds sub nom. Hemi Grp. v.

City of New York, 559 U.S. 1 (2010) (quoting 18 U.S.C. § 1964(c)).  

The statute’s “by reason of” language “require[s] a showing that the

defendant’s violation not only was a ‘but for’ cause of his injury, but was the

proximate cause as well,” which mandates “some direct relation between the

injury asserted and the injurious conduct alleged” that is not “too remote.”

Holmes v. Sec. Inv. Prot. Corp. 503 U.S. 258, 268 (1992). Accordingly, a plaintiff

seeking to certify a class of plaintiffs in a § 1964(c) suit cannot succeed unless the

proposed class can demonstrate by generalized proof that the defendant’s

misconduct was both the but‐for cause and the proximate cause of each class

member’s injury. See Zyprexa, 620 F.3d at 131‐32 (explaining that in the context of

RICO claims such as Plaintiffs’, Rule 23(b)(3) predominance requires the putative

class “to prove its theory of injury through generalized proof”).

The core of the substantive RICO violation alleged by Plaintiffs is a pattern

of mail fraud, which occurs “whenever a person, ‘having devised or intending to

devise any scheme or artifice to defraud,’ uses the mail ‘for the purpose of

executing such scheme or artifice or attempting to do so.’” Bridge v. Phoenix Bond

& Indem. Co., 553 U.S. 639, 647 (2008) (quoting 18 U.S.C. § 1341). The parties do

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page36 of 65
37

not dispute that Aventis “use[d] the mail” in connection with its alleged fraud

and thus (for purposes of this appeal) focus primarily on whether Aventis’s

alleged fraud caused an injury to Plaintiffs and other class members, rather than

on whether Aventis’s alleged conduct actually constituted a “scheme or artifice to

defraud” within the meaning of the mail‐fraud statute. The district court

determined that common issues did not predominate, rendering class

certification unavailable, because Plaintiffs could not establish using generalized

proof that each putative class member suffered an injury “by reason of” Aventis’s

alleged fraud. Because that decision was not an abuse of discretion, we affirm the

district court’s order denying class certification.

A.

Although reliance on the defendant’s alleged misrepresentation is not an

element of a RICO mail‐fraud claim, the plaintiffs’ theory of injury in most RICO

mail‐fraud cases will nevertheless depend on establishing that someone—

whether the plaintiffs themselves or third parties—relied on the defendant’s

misrepresentation. See Bridge, 553 U.S. at 658‐59; In re U.S. Foodservice Inc. Pricing

Litig., 729 F.3d 108, 119 n.6 (2d Cir. 2013), cert. denied, 134 S. Ct. 1938 (2014). That

is because reliance will typically be a necessary step in the causal chain linking

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page37 of 65
38

the defendant’s alleged misrepresentation to the plaintiffs’ injury: if the person

who was allegedly deceived by the misrepresentation (plaintiff or not) would

have acted in the same way regardless of the misrepresentation, then the

misrepresentation cannot be a but‐for, much less proximate, cause of the

plaintiffs’ injury.5 See Bridge, 553 U.S. at 658‐69.  

Because proving causation will ordinarily require proving reliance, and

because of the difficulty of proving reliance using “generalized proof,” Zyprexa,

620 F.3d at 131‐32, it is quite difficult, though not impossible, to certify a class in

a RICO mail‐fraud case. To set out some helpful guideposts for our inquiry in

this case, we first examine several cases involving “first‐party reliance”—i.e.,

cases where proving causation requires proof that the plaintiffs themselves had

relied on the defendant’s misrepresentations. Cf. Halliburton Co. v. Erica P. John

Fund, Inc., 134 S. Ct. 2398, 2408 (2014) (observing, in the context of a securities

fraud class action, that “[i]f every plaintiff had to prove direct reliance on the

defendant’s misrepresentation, ‘individual issues then would . . . overwhelm[]

                                               5 Even if the plaintiff’s or a third‐party’s reliance on the defendant’s

misrepresentation does, in fact, render that misrepresentation a but‐for cause of the

plaintiffs’ injury, the relationship between the misrepresentation and the injury must

still be “direct” enough for proximate causation to be satisfied. See Hemi Grp., 559 U.S. at

7‐14.   

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page38 of 65
39

the common ones,’ making certification under Rule 23(b)(3) inappropriate”

(second and third alterations in original) (quoting Basic Inc. v. Levinson, 485 U.S.

224, 242 (1988))).

In McLaughlin v. American Tobacco Co., 522 F.3d 215 (2d Cir. 2008), the

putative class consisted of cigarette smokers allegedly induced to purchase

“light” cigarettes by a tobacco company’s misrepresentations that light cigarettes

were healthier than regular ones. The plaintiffs’ theory of injury thus required

proving that each class member would not have bought light cigarettes but for

the misrepresentation. See id. at 227. We held that the plaintiffs could not do so by

generalized proof: “Individualized proof is needed,” we explained, “to overcome

the possibility that a member of the purported class purchased Lights for some

reason other than the belief that Lights were a healthier alternative—for example,

if a Lights smoker was unaware of that representation, preferred the taste of

Lights, or chose Lights as an expression of personal style.” Id. at 223.  

For essentially the same reasons, the Ninth Circuit denied certification in

Poulos v. Caesars World, Inc., 379 F.3d 654 (9th Cir. 2004), to a putative class of

plaintiffs who were allegedly induced to gamble by a casino’s misrepresentations

about their odds of winning. The court explained: “Some players may be

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page39 of 65
40

unconcerned with the odds of winning, instead engaging in casual gambling as

entertainment or a social activity. Others may have played with absolutely no

knowledge or information regarding the odds of winning such that the

appearance and labeling of the machines is irrelevant and did nothing to

influence their perceptions. Still others, in the spirit of taking a calculated risk,

may have played fully aware of how the machines operate.” Id. at 665‐66. For

gamblers who did not rely on the casino’s misrepresentations in deciding

whether to gamble, the alleged fraud simply played no causal role in their injury;

and because there was no way to establish through generalized proof that each

individual class member had, in fact, relied on the casino’s misrepresentations,

certification was improper. See id. at 666.  

We have recognized, however, that plaintiffs may be able to prove class‐

wide causation based on first‐party reliance without an individualized inquiry

into whether each class member relied on the defendant’s misrepresentation if

“circumstantial evidence” generates a sufficiently strong inference that all class

members did, in fact, rely. McLaughlin, 522 F.3d at 225 n.7. In certain factual

contexts, it may well be reasonable to infer that each class member would only

have taken the action leading to its injury if it had relied on the defendant’s

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page40 of 65
41

alleged misrepresentation. Such an inference may be available if, for example, the

class members all faced “the same more‐or‐less one‐dimensional decisionmaking

process,” such that the alleged misrepresentation would have been “essentially

determinative” for each plaintiff. Richard A. Nagareda, Class Certification in the

Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 121 (2009). Although deciding

whether to smoke light cigarettes and deciding whether to gamble are not one‐

dimensional decisions, a plaintiff class may be able to convince a jury that other

decisions are.  

The Eleventh Circuit’s decision in Klay v. Humana, Inc., 382 F.3d 1241 (11th

Cir. 2004), illustrates this point. In Klay, a putative class of doctors claimed that a

number of HMOs had misrepresented in their contracts with the doctors that the

HMOs would provide reimbursement for all necessary medical expenses

provided to the doctors’ patients. The Eleventh Circuit upheld class certification,

rejecting the HMOs’ contention that the plaintiffs could not show class‐wide

reliance using generalized proof: “It does not strain credulity,” the court said, “to

conclude that each plaintiff . . . relied upon the defendants’ representations and

assumed they would be paid the amounts they were due.” Id. at 1259. Thus, “[a]

jury could quite reasonably infer that guarantees concerning physician pay—the

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page41 of 65
42

very consideration upon which those agreements are based—go to the heart of

these agreements, and that doctors based their assent upon them.” Id. This Court

relied on similar logic in U.S. Foodservice, where we affirmed certification of a

class of plaintiffs who alleged that they had been overbilled by a food‐service

company. “In cases involving fraudulent overbilling,” we reasoned, “payment

may constitute circumstantial proof of reliance based on the reasonable inference

that customers who pay the amount specified in an inflated invoice would not

have done so absent reliance upon the invoice’s implicit representation that the

invoiced amount was honestly owed.” 729 F.3d at 120.

Similar principles apply in cases involving “third‐party reliance”—i.e.,

cases in which proving the necessary causal connection between the defendant’s

misrepresentation and the plaintiffs’ injury requires proving that someone other

than the plaintiffs relied on the defendant’s alleged misrepresentations. See, e.g.,

Bridge, 553 U.S. at 658‐59. Just as in cases involving first‐party reliance, the

individualized nature of the reliance inquiry can make it difficult to prove

causation using generalized proof. Nonetheless, it may be possible in certain

circumstances for a putative class to prove causation on a class‐wide basis by

offering sufficient circumstantial proof—analogous to that offered in Klay and

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page42 of 65
43

U.S. Foodservice—to permit the reasonable inference that the third parties in

question must have relied on the defendant’s misrepresentation.  

Our decision in Zyprexa illustrates the difficulty of proving class‐wide

causation in a RICO mail‐fraud case using generalized proof of third‐party

reliance. There, a putative class of HBPs sued the pharmaceutical company Eli

Lilly, alleging that Lilly had violated RICO by making false representations

about the antipsychotic medication Zyprexa, which the FDA had approved to

treat schizophrenia and bipolar disorder. 620 F.3d at 124. The plaintiffs alleged

that Lilly had concealed evidence of Zyprexa’s tendency to cause serious weight

gain and diabetes, and had unlawfully marketed Zyprexa for “off‐label”

conditions such as depression, dementia, and anxiety disorder for which there

was no evidence of effectiveness. Id. at 124‐25, 127‐28.  

The Zyprexa plaintiffs advanced two theories of injury, which we termed

the “quantity effect” theory and the “excess price” theory. Id. at 129. The former

theory—like Plaintiffs’ theory of injury in the present case against Aventis—

argued that Lilly’s misrepresentations caused the HBPs to pay for prescriptions

that would not otherwise have been written; the latter theory maintained that

Lilly’s misrepresentations caused the HBPs to pay more for Zyprexa than they

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page43 of 65
44

otherwise would have. Id. Both theories depended on the premise that doctors, as

opposed to the HBPs themselves, had relied on Lilly’s alleged misrepresentations

in choosing to prescribe Zyprexa to their patients. To prove that doctors had, in

fact, relied on Lilly’s misrepresentations in making their prescription decisions,

the plaintiffs primarily offered evidence that the number of Zyprexa

prescriptions fell after the drug’s weight‐ and diabetes‐related side effects were

disclosed by a revision to its label in 2003. Id. at 128; see also id. at 135 (noting that

the plaintiffs’ expert “assum[ed] that the decline in the number of Zyprexa

prescriptions following the [disclosure of Zyprexa’s risks] . . . was due almost

entirely to a decrease in the number of off‐label Zyprexa prescriptions,” and also

“assumed that, but for Lilly’s alleged misrepresentations, sales of Zyprexa would

never have risen above the number of sales in 2006, after more accurate

information about Zyprexa’s side effects became public”).   

This Court held that neither of the plaintiffs’ two theories was susceptible

to generalized proof of causation on the facts presented, and we therefore

reversed the district court’s certification of the plaintiff class. With respect to the

quantity effect theory in particular (the theory primarily relevant here), we

concluded—relying heavily on McLaughlin—that the plaintiffs’ attempt to show

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page44 of 65
45

causation through generalized proof was “thwart[ed]” by the individualized

nature of physicians’ prescribing decisions. Id. As we explained:

Plaintiffs argue that “the ultimate source for the information on

which doctors based their prescribing decisions was Lilly and its

consistent pervasive marketing plan.” Lilly was not, however, the

only source of information on which doctors based prescribing

decisions. An individual patient’s diagnosis, past and current

medications being taken by the patient, the physician’s own

experience with prescribing Zyprexa, and the physician’s

knowledge regarding the side effects of Zyprexa are all

considerations that would have been taken into account in addition

to the alleged misrepresentations distributed by Lilly. . . . Plaintiffs

cannot use generalized proof when individual physicians

prescribing Zyprexa may have relied on Lilly’s alleged

misrepresentations to different degrees, or not at all . . . .

Id. at 135‐36. In other words, we viewed a doctor’s decision to prescribe Zyprexa

as roughly analogous to a smoker’s decision to smoke light cigarettes: because

the decision could have been made for any numberof a multitude of reasons, we

could not reasonably infer that Lilly’s misrepresentations were, in fact, a but‐for

cause (much less the proximate cause) of the excess prescriptions paid for by the

plaintiffs. The fact that Zyprexa prescriptions declined markedly following the

disclosure of the previously concealed information was not sufficient to support

this necessary inference, especially in light of evidence that “at least some

doctors were not misled by Lilly’s alleged misrepresentations.” Id. at 135. Thus,

because a reasonable jury would be unable to find RICO causation satisfied for

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page45 of 65
46

each class member based on the generalized proof offered by the plaintiffs,

common questions did not predominate, and class certification under Rule

23(b)(3) was therefore inappropriate.

B.

Here, as in Zyprexa, Plaintiffs’ theory of injury requires them to prove

third‐party reliance by doctors on Aventis’s alleged misrepresentations in order

to establish that those misrepresentations caused HBPs to pay for Ketek

prescriptions that would not have been written otherwise. Aventis argues, and

the district court held, that Zyprexa controls this case and forecloses class

certification. We agree. As explained below, the proof offered by Plaintiffs here

does not differ in any meaningful way from that offered by the Zyprexa plaintiffs,

and Zyprexa accordingly establishes that Plaintiffs’ generalized proof is

insufficient to establish RICO causation for each member of the putative class.

We therefore conclude that the district court did not abuse its discretion in

denying class certification under Rule 23(b)(3).  

1.

Plaintiffs’ attempt to show class‐wide causation through generalized proof

centers on the premise that, unlike the prescribing decisions described in

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page46 of 65
47

Zyprexa—which were multifaceted and therefore called for individualized

determinations as to whether the prescriptions had in fact been written because

of Lilly’s alleged fraud—physicians’ prescribing decisions regarding Ketek were

“more‐or‐less one‐dimensional.” Nagareda, supra, at 121. In other words,

Plaintiffs argue that this case is more like Klay and U.S. Foodservice than it is like

Zyprexa, McLaughlin, and Poulos. Plaintiffs contend that safety is the preeminent

consideration in prescribing an antibiotic, so that had physicians known about

Ketek’s “true” risks, none of them would have prescribed it. On this logic, any

Ketek prescription written without notice of the safety information allegedly

withheld by Aventis was necessarily written in reliance on Aventis’s

nondisclosure of that information. This argument is not persuasive, and it

entirely fails as a basis for distinguishing Zyprexa.

6

                                               6 There are numerous other problems with Plaintiffs’ theory of causation, which

we largely set to the side for the purposes of our analysis—which assumes, as the

district court did, that Aventis “allegedly violated RICO by fraudulently exaggerating

the safety and efficacy of a prescription antibiotic in order to boost sales and revenues.”

Sergeants IV, 20 F. Supp. 3d at 323. Among these problems is the fact that the only safety

information allegedly withheld by Aventis was a piece of data from Study 3014

purportedly showing that Ketek was three times more dangerous than Augmentin.

Plaintiffs’ theory appears to be that Aventis withheld this result from the FDA,

rendering Aventis’s marketing materials for Ketek misleading to the extent that those

materials suggested that Ketek had “valid” regulatory approval. However, the record

indicates both that the FDA was aware of Study 3014—including the specific piece of

data mentioned by Plaintiffs, which was included in a report on Study 3014 that Aventis

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page47 of 65
48

Plaintiffs purport to demonstrate the one‐dimensional nature of a

physician’s decision to prescribe Ketek by presenting evidence showing that

sales of Ketek dropped precipitously after the FDA’s public health advisory and

Ketek’s label revisions in 2006. According to Plaintiffs, this sequence of events

illustrates that doctors must have prescribed Ketek in reliance on Aventis’s

misrepresentations prior to the new safety disclosures, because they stopped

prescribing Ketek upon learning of that new information. Plaintiffs’ expert, Dr.

Meredith Rosenthal, testified that the drop in Ketek’s sales was so precipitous

that she had never seen anything like it—that even a drug’s loss of patent

protection generally did not cause such a slide in sales. J.A. 1134‐35. Despite

testifying that Ketek’s sales history was unique in her experience, Dr. Rosenthal

nonetheless opined that, “[i]n [her] experience,” this unprecedented drop must

have been caused entirely by the disclosure of Ketek’s post‐marketing safety

data. J.A. 1135.  

The decline in Ketek sales, combined with Dr. Rosenthal’s testimony,

cannot support an inference that all pre‐disclosure Ketek prescriptions were

                                                                                                                                                  

submitted to the FDA—and that the FDA did not rely on it in approving Ketek for ABS,

AECB, and CAP. It is difficult to understand, then, how Ketek did not have “valid”

regulatory approval.  

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page48 of 65
49

written in reliance on Aventis’s alleged fraud, because we have already

addressed precisely this kind of generalized proof in Zyprexa and held that it was

insufficient to show class‐wide RICO causation. There, too, the plaintiffs’ expert

simply “assumed” that a downturn in Zyprexa’s sales was attributable to the

disclosure of the previously hidden safety risks, thereby illustrating (in his view)

that the difference between the number of prescriptions written before and those

written after the disclosure was attributable to Lilly’s alleged fraud. 620 F.3d at

135. We held that this generalized proof—which showed a simple correlation

between the safety disclosure and the decline in prescriptions—was not enough

for the plaintiffs to prove that each class member was injured by Lilly’s alleged

misrepresentations, in light of the multifaceted and individualized nature of

physicians’ prescribing decisions.

The same is true here: Ketek’s declining sales may have been correlated

with the issuance of the FDA’s public health advisory and with Ketek’s label

revisions, but mere correlation does not demonstrate causation. See, e.g., Brown v.

Entm’t Merchs. Ass’n, 131 S. Ct. 2729, 2739 (2011). Moreover, the weakness of the

correlation‐based inference that Plaintiffs ask us to draw is particularly stark in

light of the fact that Ketek’s lower sales were also correlated with significant

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page49 of 65
50

larger changes in the market for anti‐infectives, including some of the dominant

market players moving off‐patent, as well as a growing scientific consensus that

the entire field of anti‐infective drugs was of dubious efficacy in treating Ketek’s

most popular indications, ABS and AECB.7 Plaintiffs made no attempt to control

for these other factors, or to supply any other information that might render

reasonable the inference that the drop in sales was actually attributable to the

safety disclosures, as opposed to other factors.  

To be sure, it is possible (as the district court recognized) to envision a

drug so dangerous that no physician would ever prescribe it to treat a non‐fatal

condition if that physician were aware of its true risks. And, in such an

extraordinary case, a reasonable jury might well be able to infer solely from a

precipitous drop‐off in sales that any prescription for the drug was necessarily

written in reliance on the defendant’s concealment of the drug’s risks. See

Sergeants IV, 20 F. Supp. 3d at 327 (“Obviously, in situations where the health

                                               7 Plaintiffs concede that Ketek’s final drop‐off in sales was partly caused by

Aventis’s decision to stop actively promoting Ketek and to terminate its rebate contracts

with PPMs, but argue that these are dependent rather than independent variables—that

Aventis only stopped promotion and rebating because it had given up on Ketek’s

success. Even if we accept this premise, however, it merely begs the question why

Aventis believed Ketek could no longer be a market success; Plaintiffs, of course,

contend that Aventis gave up on Ketek because of the disclosure of post‐marketing

safety data, but this is merely their same post hoc argument over again.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page50 of 65
51

risks of a drug are extremely severe, safety considerations might be the sole

determinant of a physician’s decision.”). After all, the multitude of factors

recognized in Zyprexa as entering into individual physicians’ prescribing

decisions—e.g., the age and sex of the patient, the availability of generics, or the

patient’s past reactions to a drug—would be irrelevant if a physician knew that

the drug would cause certain death or, to take a less extreme example, if the

physician knew that a drug meant to treat acne would cause blindness in a tenth

of the patients who took it. The tradeoff simply would never be worth the risk. In

such a case, the dangerousness of the drug would speak for itself, leaving open

the possibility of proving class‐wide RICO causation through “circumstantial

proof,” McLaughlin, 522 F.3d at 225 n.7, such as a precipitous drop‐off in sales,

rather than through individualized inquiries as to physicians’ actual reliance.

Zyprexa did not involve an extremely dangerous drug, so its class certification

holding has little to say about cases that do.   

Plaintiffs suggest that this is such a case—that Ketek is so dangerous that

no reasonable physician would have prescribed it if the safety information

allegedly withheld by Aventis had been known. But the record simply does not

support this conclusion. The evidence adduced by Plaintiffs shows that Ketek

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page51 of 65
52

had risks. But it also shows that all antibiotics prescribed to treat respiratory

infections have risks, and that Ketek’s risks, while perhaps higher than those of

most of its competitors, were well within the range of dangerousness typical of

similar anti‐infectives.8 By the end of June 2006, after more than six million

domestic Ketek prescriptions, only four deaths and approximately fifty‐three

serious hepatic adverse events had been linked to Ketek. Even assuming

widespread underreporting of adverse drug events, that rate of adverse events is

simply not enough to support an inference that Ketek was so seriously

dangerous that no physician would ever have prescribed it had the safety

information allegedly withheld by Aventis been made public earlier.

Furthermore, as the district court observed, had doctors’ prescribing decisions

truly been one‐dimensional, one would expect sales of Ketek to cease entirely

after the new safety information was made available. But Ketek’s “[s]ales did not

                                               8 Even the drugs that we consider most benign can carry surprisingly serious

risks. See, e.g., Food & Drug Admin., Acetaminophen Overdose and Liver Injury—

Background and Options for Reducing Injury (2009),

http://www.fda.gov/downloads/AdvisoryCommittees/CommitteesMeetingMaterials/Dr

ugs/DrugSafetyandRiskManagementAdvisoryCommittee/UCM164897.pdf (noting that

acetaminophen (a drug found in numerous over‐the‐counter products, including

Tylenol) “was the leading cause of acute liver failure in the United States,” id. at 2, in

part because “[c]onsumers may consider acetaminophen a familiar product [and]

assume that the medicine is completely safe,” id. at 4).

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page52 of 65
53

drop to zero immediately after the FDA issued a public health advisory relating

to Ketekʹs liver toxicity in January 2006. Rather, sales declined in a manner

consistent with the cyclical manner in which sales had declined during the same

months the previous year.” Sergeants IV, 20 F. Supp. 3d at 327.

Plaintiffs point to two sources of evidence supporting their argument that

no doctor would have prescribed Ketek if its true risks had been known earlier.

First, Plaintiffs argue that the FDA’s withdrawal of approval for two of Ketek’s

indications and imposition of a black box warning demonstrate Ketek’s dangers.

But the record shows that the vote at the December 2006 joint committee meeting

to withdraw those indications was not motivated purely or even predominantly

by safety: many voting attendees did not mention safety at all, but rather

explained their votes on the basis of effectiveness, citing concerns that Ketek

might not be any better than a placebo at treating ABS and AECB. And the black‐

box warning added to Ketek’s label had nothing to do with Ketek’s hepatic risks:

it was imposed in connection with Ketek’s tendency to exacerbate the symptoms

of patients afflicted with the rare neurological disorder myasthenia gravis. See

J.A. 1725.   

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page53 of 65
54

Second, Plaintiffs argue that data from Study 3014—data that they claim

Aventis withheld from the FDA—revealed that Ketek was three times more

likely than Augmentin to cause serious hepatic adverse events. But Plaintiffs’

position throughout this litigation, including on appeal, has been that Study 3014

was plagued with fraud and therefore unreliable. And on this point, Plaintiffs are

absolutely correct. The doctors responsible for conducting Study 3014 invented

patients out of whole cloth, among a host of other failures that tainted the data

with “fraud.” J.A. 647, 6498. Plaintiffs’ assertion that a specific Study 3014 result

would have revealed the true danger of Ketek if only it had been disclosed to the

FDA therefore strains credulity. The Study 3014 numbers reveal nothing, because

they are utterly unreliable and probably fictional. Plaintiffs cannot describe

Study 3014 as fraudulent when it is to their advantage while simultaneously

arguing that its findings are material and would have changed the FDA’s

approval decision—and physicians’ prescribing decisions—if made public.

Accordingly, the alleged “three times as dangerous” result also does not show

that no doctor would have prescribed Ketek absent Aventis’s alleged

misrepresentations.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page54 of 65
55

2.

As the foregoing discussion illustrates, Plaintiffs’ theory in this case is

effectively all‐or‐nothing: Plaintiffs seek to persuade us that every individual

physician’s decision to prescribe Ketek was truly a “one‐dimensional” decision

based entirely on safety, and that the safety information allegedly withheld by

Aventis was so significant that it would dictate every physician’s decisionmaking,

based on nothing more than a decline in Ketek’s sales figures. We have explained

why this theory fails: on this record (as in Zyprexa), given the number of factors

that enter into doctors’ prescribing decisions, it is simply not reasonable to infer

from just that decline in sales that all pre‐decline Ketek prescriptions were

written in reliance on the alleged misrepresentations about Ketek’s safety. In

contrast to the hypothetical case of an extremely dangerous drug, the record here

does not suggest that the safety information allegedly withheld by Aventis—

which revealed Ketek to be at most marginally more dangerous than comparable

antibiotics—would reasonably be expected to have such a significant impact on

the number of prescriptions written. This strongly suggests that something other

than Aventis’s alleged misrepresentations was at least partly responsible for the

decline in sales, which in turn suggests that physicians’ pre‐decline prescription

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page55 of 65
56

decisions were not, in fact, based solely on their misperception of Ketek’s relative

safety.  Plaintiffs’ all‐or‐nothing theory thus simply does not hold up.

We wish to note, however, that it may be possible to demonstrate class‐

wide RICO causation in a case such as this one by adducing generalized proof

from which a reasonable jury could conclude that only some prescriptions paid

for by each class member were written based on the defendant’s alleged

misrepresentations. In other words, not all claims of this type must necessarily be

all‐or‐nothing claims. In cases in which first‐party reliance is a necessary part of

the plaintiffs’ chain of causation—as in McLaughlin and Poulos—the plaintiff class

has no choice but to show through generalized proof that each one of them relied

on the defendant’s alleged misrepresentations; otherwise, the misrepresentations

could not have caused an injury to each class member. The situation is arguably

somewhat different in a third‐party reliance case like this one. Here, the question

is whether Aventis’s misrepresentations caused an injury to each HBP, and

because each HBP paid for numerous Ketek prescriptions, each would have been

injured by Aventis’s misrepresentations so long as at least some of the

prescriptions for which it paid were written in reliance on those

misrepresentations. While a RICO plaintiff must always show that the

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page56 of 65
57

defendant’s conduct caused an “actual, quantifiable injury,” McLaughlin, 522 F.3d

at 227, the precise number of excess prescriptions paid for by each HBP would

seem to bear on the damages suffered by each class member, and not on the

separate question whether Aventis’s misrepresentations caused each class

member to suffer an injury.9 See In re Neurontin Mktg. & Sales Practices Litig., 712

F.3d 21, 34 (1st Cir. 2013) (asking whether “absent [the defendant’s] fraud, [the

plaintiff] would have paid for fewer . . . prescriptions”); BCS Servs., Inc. v.

Heartwood 88, LLC, 637 F.3d 750, 759 (7th Cir. 2011) (finding that “[t]he [district

court] . . . confused proof of causation with proof of amount of damages and so

denied the plaintiffs the benefit of the easier burden of proving damages than of

causation”).

Even if we were to read Plaintiffs’ claim to be of this more nuanced type,

requiring only a showing that Aventis’s alleged misrepresentations caused each

                                               9 As an alternative argument in favor of affirming the district court’s class‐

certification decision, Aventis claims that the damages model proffered by Plaintiffs is

insufficient to demonstrate damages on a class‐wide basis. See Comcast Corp. v. Behrend,

133 S. Ct. 1426, 1433‐35 (2013) (reversing a lower court’s certification of a class on the

basis of this argument). We do not reach this alternative argument because we conclude

that Plaintiffs cannot prove class‐wide causation using generalized proof for the reasons

given in the text. But unlike in this case, in which Plaintiffs have sought damages on a

class‐wide basis, it may be possible in other cases to certify a class as to liability while

leaving damages to be ascertained on an individualized basis—in which case Comcast’s

guidance on aggregate damages would be largely irrelevant. See Butler v. Sears, Roebuck

& Co., 727 F.3d 796, 800 (7th Cir. 2013).  

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page57 of 65
58

HBP to suffer an injury, Plaintiffs’ generalized proof in this case still falls short.

At least where (as here) there is no basis for inferring that the drug in question

was so dangerous that no doctor would prescribe it if its true risks were

disclosed, Zyprexa establishes that mere correlation between a decline in

prescriptions and a disclosure of allegedly withheld information is insufficient to

prove class‐wide RICO causation on the theory that the defendant’s withholding

of safety information caused doctors to write excess prescriptions. To ultimately

find a defendant liable, a jury must be able to base its decision on something

firmer than speculation. See Anderson v. Liberty Lobby, 477 U.S. 242, 247‐52 (1986).

As in Zyprexa, the kind of correlation evidence presented here does not furnish a

sound basis to find causation on a class‐wide basis.

Plaintiffs did not attempt to offer anything beyond mere correlation that

might support a reasonable inference that Aventis’s alleged withholding of safety

information played a legally sufficient causal role in the number of Ketek

prescriptions written. Significantly, Dr. Rosenthal conceded that she had not

been asked by Plaintiffs’ counsel to perform the kind of regression analysis that

might have isolated the relative causal effect of the numerous variables bearing

on the decline in Ketek’s sales. See J.A. 1163 (“Q: [Y]ou haven’t attempted in this

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page58 of 65
59

case, to undertake a cause‐and‐effect analysis relating to the various factors that

could have led to the decline in Ketek’s sales . . . , correct?” “A: That’s correct. . . .

I was not asked to conduct a specific regression analysis which might be the kind

of analysis that an economist would undertake.”).10 Regression models are a

well‐known and widely accepted tool of economic analysis, and while they

“cannot explicitly determine causation or prove causality between . . . variables,”

they can strongly support a causal relationship between two variables (here,

safety disclosures and sales) by ruling out or limiting the influence of other

variables, or by demonstrating that those other variables are themselves merely a

                                               10 When asked how much of the decline in Ketek’s sales was attributable to

normal seasonal patterns, Dr. Rosenthal responded that she “ha[d]n’t been asked to

quantify specifically the effects of the diffusion of information over this period

separately from other effects.” J.A. 2930. She also stated that she “ha[d] not quantified

the effect of [contracting or rebating changes] on total sales,” J.A. 2931, and had “not

been asked to quantify” the effects of the January 2006 public health advisory versus the

effects of the withdrawal of two of Ketek’s indications in February 2007, and thus could

not “analyze them separately,” J.A. 2924. Finally, Dr. Rosenthal did not “make any

attempt to analyze the impact of the entry of authorized generics in the market and the

impact that may have had on Ketek sales.” J.A. 2929. Although Dr. Rosenthal testified

that “the literature in pharmaceutical economics . . . shows that generic entry for a

therapeutically equivalent product has little, if any effect on a given brand name drug,”

J.A. 1155, she also conceded that the entry of an authorized generic drug into the market

“could have had an impact,” albeit “[a]n undefined small percentage,” J.A. 1166.

Whether this “small percentage” for each new generic would be multiplied for each of

the five anti‐infectives that became available as generics during Ketek’s sales period or

not, and whether the effect of a drug going off‐patent remains small even if that drug,

like Zithromax, was the market leader, are questions that Dr. Rosenthal did not address.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page59 of 65
60

function of one of the first two. Andrew Dick & Peter Boberg, Regression Analysis,

Antitrust 89 (Fall 2005). “At no time did Dr. Rosenthal say that a regression

analysis could not be performed due to the lack of data or some other problem,

or that a regression analysis would be inappropriate in this case.” Sergeants I,

2011 WL 824607, at *10 n.16.

The simplistic nature of Dr. Rosenthal’s analysis here distinguishes this

case from the First Circuit’s decision in In re Neurontin Marketing & Sales Practices

Litigation—another case in which Dr. Rosenthal served as the plaintiffs’ expert. In

Neurontin, the plaintiffs were HBPs who alleged that the pharmaceutical

company Pfizer had violated RICO by fraudulently marketing the drug

Neurontin, which had only been approved by the FDA for the treatment of

seizures, as an effective off‐label treatment for bipolar disorder, neuropathic

pain, and migraines. 712 F.3d at 27‐28. The First Circuit’s decision did not

involve class certification, but in the course of affirming a jury verdict in the

plaintiffs’ favor, the court rejected Pfizer’s contention that the plaintiffs had

offered insufficient proof that Pfizer’s misrepresentations caused doctors to write

excess prescriptions paid for by the plaintiffs. The plaintiffs did not rely on

individualized evidence that doctors had, in fact, relied on Pfizer’s

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page60 of 65
61

misrepresentations, and instead presented an aggregate “regression analysis”

performed by Dr. Rosenthal “on sales information against promotional spending

on detailing, professional journal advertising, and the retail value of samples,

while controlling for other variables.” Id. at 30. The First Circuit concluded that

Dr. Rosenthal’s analysis, which determined that “Pfizer’s [off‐label] marketing

had a causal effect on prescribing behaviors,” id. at 45, was sufficient to support

the jury’s finding of RICO causation, id. at 45–47. Significantly, the Neurontin

court stressed the differences between Dr. Rosenthal’s analysis there and the

mere correlation evidence relied upon by the plaintiffs in Zyprexa, which did

“not come close to resembling Dr. Rosenthal’s evidence.” Id. at 46; see also id.

(noting that in Zyprexa, “the plaintiffs’ aggregate evidence of causation . . .

involv[ed] only an extrapolation from the fact that the number of off‐label

prescriptions for Zyprexa fell after Eli Lilly’s fraud became known”).

As noted, the First Circuit did not address class certification in Neurontin,

so it did not have occasion to hold squarely that a class of HBPs could succeed in

proving class‐wide RICO causation based on a regression analysis. In particular,

the First Circuit was not required to decide whether Dr. Rosenthal’s analysis—

which it held was sufficient to support a finding that the specific HBPs before the

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page61 of 65
62

court had suffered an injury caused by Pfizer’s misrepresentations—would also

be sufficient to support the broader finding (necessary when class certification is

at issue) that all HBPs in a class had suffered an injury caused by those

misrepresentations. Nonetheless, Neurontin does indicate that where individual

physicians’ reliance on a pharmaceutical company’s misrepresentations forms a

necessary link in the causal chain between those misrepresentations and the

plaintiffs’ injury, such reliance can be proved to a jury with sufficiently powerful

aggregate evidence, as opposed to individualized inquiries as to each prescribing

physician’s actual decisionmaking.  

In any event, we need not (and do not intend to) express any view here on

whether or when an aggregate regression analysis similar to the one deployed in

Neurontin might be sufficient to prove causation on a class‐wide basis in other

pharmaceutical‐marketing cases alleging a pattern of mail fraud actionable under

RICO. Here, Plaintiffs’ causation evidence—apparently by their own choice—is

akin to the simplistic proof introduced by the Zyprexa plaintiffs, and not to the

far more sophisticated proof offered in Neurontin. Because Zyprexa controls, we

conclude that Plaintiffs are unable to show RICO causation by generalized proof,

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page62 of 65
63

and we accordingly conclude that the district court did not err in denying

Plaintiffs’ class‐certification motion.

II.

The district court granted summary judgment to Aventis on Plaintiffs’

RICO claims, relying on Zyprexa to hold that generalized proof of causation was

impossible because of the intervening actions of prescribing physicians. As

explained above, this conclusion—that Plaintiffs cannot prove third‐party

reliance, and thus causation, by generalized proof—is sound. On appeal,

Plaintiffs do not criticize the district court’s decision on any grounds particular to

summary judgment, but rather continue to argue, as they did in the class

certification context, that they can prove their claim by generalized evidence. As

we have explained, they cannot.

This might be the end of the inquiry, but we observe that Zyprexa declined

to extend its class certification holding regarding the quantity effect theory to

also decide Lilly’s motion for summary judgment: “while that theory cannot

support class certification,” the Zyprexa Court noted, “it is not clear that the

theory is not viable with respect to individual claims by some [HBPs] or other

purchasers.” 620 F.3d at 136. The Zyprexa court thus “decline[d] to consider

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page63 of 65
64

whether summary judgment with respect to the quantity effect theory is

appropriate in the first instance.” Id.  

In keeping with the distinction drawn in Zyprexa, we reaffirm that a

plaintiff is not necessarily foreclosed from bringing a RICO claim merely because

its attempt to certify a class using generalized proof has failed. As noted,

moreover, it may be possible for a plaintiff to establish its own claim (as opposed

to the claims of each class member) using aggregate statistical proof—i.e.,

without having to show the individual reliance of thousands of prescribing

doctors—provided that such proof is more robust, and therefore more probative

of causation, than the simplistic correlation evidence presented here.11 See, e.g.,

Neurontin, 712 F.3d at 45‐47. But the correlation evidence offered by Plaintiffs

here is no more probative as to whether Aventis’s alleged fraud caused Plaintiffs

themselves to suffer an injury than it is as to whether that alleged fraud caused

an injury to each HBP in the putative class. Nor have Plaintiffs offered any other

kind of proof that might show that they themselves, if not all class members,

suffered an injury by reason of Aventis’s alleged fraud. See Sergeants IV, 20 F.

                                              

11 We do not express any view on what evidence Plaintiffs might have presented

in order to succeed on their individual claims, as Plaintiffs neither assert that they have

put forth such proof nor challenge the district court’s conclusion that they have not

done so.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page64 of 65
65

Supp. 3d at 328‐29 (“Since Plaintiffs do not argue that they are prepared to offer

individualized proof, . . . Defendants are entitled to summary judgment on the

RICO claims.”). Accordingly, Plaintiffs cannot prove the causation element of

their RICO claims, and we therefore affirm the district court’s grant of summary

judgment to Aventis on those claims.

III.

We affirm the dismissal of Plaintiffs’ state‐law claims for substantially the

reasons stated by the district court in its well‐reasoned opinion.

CONCLUSION

We have considered Plaintiffs remaining contentions and find them to be

without merit. For the foregoing reasons, we AFFIRM the orders of the district

court denying Plaintiffs’ motion for class certification and granting Aventis’s

motion for summary judgment.

Case 14-2318, Document 187-1, 11/13/2015, 1641059, Page65 of 65