Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-03504/USCOURTS-cand-4_15-cv-03504-11/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

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United States District Court 

Northern District of California 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHRISTOPHER CORCORAN, et al.,

Plaintiffs, 

 vs. 

CVS HEALTH CORPORATION, INC., 

Defendant. 

Case No.: 15-CV-3504 YGR

ORDER ON MOTION TO DISMISS THIRD 

AMENDED COMPLAINT

Re: Dkt. No. 102 

Plaintiffs Christopher Corcoran, Robert Garber, Toni Odorisio, Robert Guarnieri, Onnolee 

Samuelson, Michael Norkus, Vincent Gargiulo, Zulema Avis, Ken Bolin, Robert Jenks, Tyler 

Clark, Carolyn Caine, Linda Krone, Elizabeth Gardner, Carl Washington, Zachary Hagert, Debbie 

Barrett, Robert Podgorny, Kevin Cauley, Walter Wulff, Amanda Gilbert, and Gilbert Brown 

(collectively, “plaintiffs”) bring this action on behalf of themselves and all others similarly situated 

against defendant CVS Health Corporation (“defendant”) for allegedly overcharging them for 

generic prescription drugs. The Court previously granted motions to dismiss the second amended 

complaint (Dkt. No. 49, “SAC”) in part, namely dismissing: CVS Pharmacy, Inc. as a defendant; 

Counts 2, 5, 11, and 19 without leave to amend; and Count 12 under the Texas Deceptive Trade 

Practices Act with leave to amend. (Dkt. No. 96, “Order.”) Plaintiffs’ third amended complaint 

followed. (Dkt. No. 101, “3AC.”) 

Currently pending before the Court is defendant’s motion to dismiss in part the 3AC on two 

grounds, specifically that plaintiffs: (i) do not have Article III standing to assert the common law 

claims in Counts 1, 2, or 3 on behalf of absent class members whose claims are governed by state 

laws under which plaintiffs themselves cannot bring claims; and (ii) have again failed to allege 

facts sufficient to state a claim under the Texas Deceptive Trade Practices Act. (Dkt. No. 102.) 

Case 4:15-cv-03504-YGR Document 130 Filed 07/29/16 Page 1 of 8
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United States District Court 

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Having carefully considered the papers submitted, the pleadings in this action, and for the 

reasons set forth below, the Court hereby GRANTS IN PART and DENIES IN PART defendant’s 

motion as follows: 

I. BACKGROUND

 The Court previously recounted the salient allegations in its order on defendant’s motions to 

dismiss the SAC. (See Order at 2–5). Because the pertinent allegations in the 3AC largely mirror 

those in the SAC, the Court will not repeat plaintiffs’ allegations herein. Plaintiffs did amend 

certain allegations pled in support of their claim under the Texas Deceptive Trade Practices Act and 

the Court addresses those amendments in more detail in Section III, infra. 

 

II. MOTION TO DISMISS COMMON LAW CLAIMS FOR LACK OF ARTICLE III

STANDING UNDER RULE 12(b)(1) 

 Defendant moves under Rule 12(b)(1) to dismiss the common law claims for fraud, 

negligent misrepresentation, and unjust enrichment in Counts 1, 2, and 3, respectively (collectively, 

“the common law claims”) under the laws of the thirty-eight states1

 in which no named plaintiff 

resides or alleges to have purchased a generic drug prescription from defendant. More particularly, 

defendant contends that plaintiffs lack Article III standing to assert such claims. A motion to 

dismiss pursuant to Rule 12(b)(1) is a challenge to the Court’s subject matter jurisdiction. “Federal 

courts are courts of limited jurisdiction,” and “[i]t is to be presumed that a cause lies outside this 

limited jurisdiction,” unless shown otherwise. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 

375, 377 (1994). The party invoking the jurisdiction of a federal court bears the burden of 

establishing that the court has the requisite subject matter jurisdiction to grant the relief requested. 

Id. Where, as here, the challenge is to the standing of plaintiffs as alleged in the complaint, the 

Court looks only to the allegations in the complaint and assumes the allegations in the complaint 

are true. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). 

 As a threshold matter, the Court rejects plaintiffs’ argument that defendant cannot raise this 

issue now because it was not raised in the previous motion to dismiss. Rule 12 explicitly provides 

 1 Defendant moves to dismiss the common law claims under the laws of all jurisdictions 

except: Arizona, California, Florida, Georgia, Illinois, Maryland, Massachusetts, New Jersey, New 

York, Ohio, Pennsylvania, Texas, and the District of Columbia. 

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United States District Court 

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that a court must consider issues of subject matter jurisdiction at any time, regardless of whether a 

defendant failed to raise it on a prior motion. See Fed. R. Civ. P. 12(h)(3). The Court is without 

subject matter jurisdiction over claims for which plaintiffs do not have Article III standing, and is 

therefore bound to consider this issue whenever it is raised, on its own motion, or even on appeal. 

Renee v. Duncan, 686 F.3d 1002, 1012 (9th Cir. 2012) (“Lack of Article III standing is a nonwaivable jurisdictional defect that may be raised at any time, even on appeal after failing to raise it 

in the district court.”). Defendant simply cannot waive this argument.2

 Plaintiffs next argue the 3AC pleads adequately Article III standing as to each of them. The 

Court agrees that the 3AC plausibly alleges Article III standing sufficient to bring plaintiffs’ 

individual claims. Although plaintiffs allege standing properly to bring the common law claims 

under the laws of the thirteen jurisdictions in which they reside and/or filled prescriptions, it does 

not necessarily follow that they allege standing properly under the laws of the thirty-eight other 

jurisdictions. “[S]tanding is claim- and relief-specific, such that a plaintiff must establish Article 

III standing for each of her claims and for each form of relief sought.” In re Carrier IQ, Inc., 

Consumer Privacy Litig., 78 F. Supp. 3d 1051, 1064–65 (N.D. Cal. 2015) (internal quotations 

omitted) (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006) (“our standing cases 

confirm that a plaintiff must demonstrate standing for each claim he seeks to press”)). “In a class 

action, standing is satisfied if at least one named plaintiff meets the requirements.” Ollier v. 

Sweetwater Union High Sch. Dist., 768 F.3d 843, 865 (9th Cir. 2014) (quoting Bates v. United 

Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) (en banc)). 

 Here, no plaintiff resides in, or alleges to have suffered an injury in, any of the thirty-eight 

states at issue in defendant’s motion. In such instances, the consensus among courts in this District, 

including the undersigned, is that named plaintiffs “lack standing to assert claims based on those 

 2

 The Court recognizes that whether a plaintiff may represent a class of another state’s 

residents is not necessarily, or at least not only, an issue of standing. For the reasons discussed, 

infra, the Court finds that the better reasoned view is that the issue is one of Article III standing. 

Regardless of whether this is an issue of standing or class certification, however, the Court finds it 

appropriate to adjudicate at this juncture. Plaintiffs cannot bring claims under the laws of states to 

which they have no alleged connection; delaying dismissal of Counts 1, 2, and 3 to the extent 

plaintiffs allege common law claims under the laws of those thirty-eight states is not in the interests 

of the parties, the Court, or judicial efficiency. 

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states’ laws.” Fenerjian v. Nongshim Co. Ltd., 72 F. Supp. 3d 1058, 1082–83 (N.D. Cal. 2014) 

(dismissing state-law claims where no named plaintiff resided or suffered an injury); accord In re 

Carrier IQ, 78 F. Supp. 3d at 1075 (concluding that “named Plaintiffs do not have standing to 

assert claims from states in which they do not reside or did not purchase [the product at issue]”); In 

re Lithium Ion Batteries Antitrust Litig., 2014 WL 4955377, at *16–18 (N.D. Cal. Oct. 2, 2014) 

(recognizing the “principle that a class cannot assert a claim on behalf of an individual that they 

cannot represent”) (internal quotations and alterations removed); Pardini v. Unilever United States, 

Inc., 961 F. Supp. 2d 1048, 1061 (N.D. Cal. 2013) (holding plaintiff “does not have standing to 

assert a claim under the consumer protection laws” of states other than California, where the 

plaintiff purchased the product); In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1163–

64 (N.D. Cal. 2009) (“Where, as here, a representative plaintiff is lacking for a particular state, all 

claims based on that state’s laws are subject to dismissal.”) (emphasis removed) (citing In re 

Graphics Processing Units Antitrust Litig., 527 F. Supp. 2d 1011, 1026 (N.D. Cal. 2007)); In re 

Apple & AT & TM Antitrust Litig., 596 F. Supp. 2d 1288, 1309 (N.D. Cal. 2008) (granting motion 

to dismiss claims under all jurisdictions except those in which the named plaintiffs resided). 

 The Court previously dismissed plaintiffs’ claim under the Rhode Island Deceptive 

Practices Act, finding that no named plaintiff had Article III standing to invoke Rhode Island law 

because there was no allegation that any transaction occurred in Rhode Island. (Order at 22–24.) 

The same reasoning applies equally here. Plaintiffs do not have standing to bring the common law 

claims under the laws of the thirty-eight states to which they have alleged no connection. The 

common law claims brought based on the laws of those states are therefore DISMISSED. 

 The Court disagrees with plaintiffs’ view that the better approach is to wait and address this 

issue in connection with class certification. District courts may exercise discretion to defer 

consideration of standing until after class certification. See In re Carrier IQ, 78 F. Supp. 3d at 

1068–75 (citing cases). The facts of this case, however, counsel against exercising that discretion. 

The named plaintiffs reside in twelve different states and one plaintiff alleges to have been injured 

in the District of Columbia. (3AC ¶¶ 16–37.) Thus, their claims involve, at most, the laws of 

thirteen jurisdictions. Putative class members from the thirty-eight other states for which the 

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common law claims are asserted in Counts 1, 2, and 3 “is vast relative to the claims to which 

[plaintiffs] have standing.” Id. at 1074. In these circumstances, plaintiffs should be required to 

have named plaintiffs with standing to prosecute claims under the laws of those thirty-eight states. 

Id. Further, it remains to be seen the extent to which a nationwide class could be certified given the 

allegations. See Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 591 (9th Cir. 2012). 

Accordingly, the dismissal is WITHOUT PREJUDICE to plaintiffs being able to amend their 

pleading to include additional named plaintiffs, subject to Rule 15 and standards applicable thereto. 

III. MOTION TO DISMISS TEXAS DECEPTIVE TRADE PRACTICES ACT CLAIM UNDER 

RULE 12(b)(6) 

Defendant moves under Rule 12(b)(6) to dismiss Count 9 in the 3AC, which arises under 

the Texas Deceptive Trade Practices Act (“TDTPA”), for failure to state a claim. Dismissal for 

failure to state a claim is proper if there is a “lack of a cognizable legal theory or the absence of 

sufficient facts alleged under a cognizable legal theory.” Conservation Force v. Salazar, 646 F.3d 

1240, 1242 (9th Cir. 2011) (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 

1988)). The complaint must plead “enough facts to state a claim [for] relief that is plausible on its 

face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face 

“when the plaintiff pleads factual content that allows the court to draw the reasonable inference that 

the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If 

the facts alleged do not support a reasonable inference of liability, stronger than a mere possibility, 

the claim must be dismissed. Id. at 678–79; see In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 

(9th Cir. 2008) (a court is not required to accept as true “allegations that are merely conclusory, 

unwarranted deductions of fact, or unreasonable inferences”). 

Relevant here, to state a claim under the TDTPA, plaintiffs must allege, inter alia, that 

defendant engaged in either: (A) an unlawful practice specifically enumerated in the TDTPA under 

Tex. Bus. & Com. Code section 17.50(a)(1), or (B) “[u]nconsionable action or course of action by 

any person,” under Tex. Bus. & Com. Code section 17.50(a)(3). The Court previously dismissed 

the TDTPA claim, finding that the SAC did not allege either type of conduct plausibly. (Order at 

26.) Plaintiffs amended their allegations with respect to the TDTPA in the 3AC. Defendant argues 

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that plaintiffs’ amendments do not cure the pleading defects of the TDTPA cause of action as to 

both “specifically enumerated” and “unconscionable” conduct. The Court addresses these 

arguments in turn: 

A. Unlawful Practice Enumerated in the TDTPA 

 With respect to the TDTPA claim asserted under Tex. Bus. & Com. Code section 

17.50(a)(1), namely, an unlawful practice enumerated in the TDTPA, plaintiffs contend their 

allegations of defendant’s conduct fall within the TDTPA’s prohibition on actions “failing to 

disclose information concerning goods or services . . . [with the intent] to induce the consumer into 

a transaction into which the consumer would not have entered had the information been disclosed.” 

Tex. Bus. & Com. Code § 17.46(b)(24). Upon review of the SAC, the Court found that plaintiffs: 

“fail[ed] to allege that Plaintiff Pacheco (the only Texas plaintiff) would not have entered into the 

transactions absent the failure to disclose. In fact to the contrary, Pacheco allege[ed] she plans to 

purchase generic drugs from CVS in the future.” (Order at 26:19–22.) The 3AC addresses this 

defect by terminating Texas plaintiff Irma Pacheco and substituting in two plaintiffs domiciled in 

Texas: Amanda Gilbert and Gilbert Brown.3

 (3AC ¶¶ 36–37.) Unlike Ms. Pacheco, plaintiffs 

Gilbert and Brown do not allege that they intend to purchase generic drug prescriptions from CVS 

in the future. (Cf. 3AC ¶¶ 36–37; SAC ¶ 25.) 

 Critically, the new Texas plaintiffs do not affirmatively allege they “would not have 

entered” into the transaction had the information been disclosed, instead alleging they “would not 

have paid” the allegedly inflated prices absent defendant’s deception. (3AC ¶ 173.) Defendant 

contends this is a dispositive distinction, requiring dismissal of the TDTPA claim. By contrast, 

plaintiffs argue defendant attempts to hold them to a heightened standard not required by law or 

reason. The Court agrees. 

 Taking defendant’s argument to its logical conclusion, plaintiffs could not survive Rule 12 

without pleading they would not have bought their prescription drugs at all absent defendant’s 

allegedly deceptive practice. No such requirement in the law exists. Transactions are term-

 3

 The Court rejects defendant’s view that plaintiffs Gilbert and Brown were added in an 

untimely fashion and without the Court’s permission. The Court granted plaintiffs leave to amend 

their TDTPA claim, which they have done in part through this substitution. (Order at 28.) 

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specific, including price. The Texas Court of Appeals rightly acknowledged this reality when 

construing Section 17.46(b)(24) to require plaintiffs to allege they “would not have entered into the 

transaction on the same terms had the information been disclosed.” Gill v. Boyd Distribution 

Center, 64 S.W.3d 601, 604 (Tex. App. 2001) (emphasis supplied). Taken as true, plaintiffs’ 

allegation that they “would not have paid had CVS not engaged in its deceptive conduct” (3AC ¶ 

173) plausibly alleges their unwillingness to enter the same transaction had defendant not failed to 

disclose its improper pricing practice, i.e. an action by defendant in violation of Tex. Bus. & Com. 

Code section 17.46(b)(24). This TDTPA claim is alleged properly in the 3AC. Defendant’s 

motion on this ground is DENIED. 

B. Unconscionable Action 

With respect to the TDTPA claim asserted under Tex. Bus. & Com. Code section 

17.50(a)(3) as an “unconscionable action,” that term is defined in the statute as “an act or practice 

which, to a consumer’s detriment, takes advantage of the lack of knowledge, ability, experience, or 

capacity of the consumer to a grossly unfair degree.” Tex. Bus. & Com. Code § 17.45(5) 

(emphasis supplied). The Texas Supreme Court in turn has interpreted “grossly unfair” in this 

context to mean “glaringly noticeable, flagrant, complete and unmitigated,” a standard that cannot 

be met with allegations of merely “unfair” conduct. Chastain v. Koonce, 700 S.W.2d 579, 584 

(Tex. 1985). The Court found in its earlier order that the SAC alleged knowledge and intent but did 

not “allege actions that amount to practices that took advantage of Pacheco and similarly situated 

class members ‘to a grossly unfair degree.’” (Order at 26:22–24.) 

The 3AC adds allegations regarding defendant’s superior knowledge and expertise in the 

adjudication process. 4 (Cf. 3AC ¶¶ 168–78; SAC ¶¶ 194–202.) Defendant argues these additional 

allegations are insufficient because they do not address any new actions by defendant that are 

 4

 The Court rejects plaintiffs’ invitation to consider a brief filed by the State of Texas in an 

unrelated case to find that defendant’s conduct as plead in the 3AC is grossly unfair. Reference to 

the brief appears nowhere in the 3AC. Rather, plaintiffs submitted it in connection with their 

opposition to defendant’s pending motion. On a Rule 12(b)(6) motion, the Court “may not look 

beyond the complaint to a plaintiff’s moving papers” to determine whether plaintiffs have stated a 

legally cognizable claim. Schneider v. Cal. Dept. of Corrections, 151 F.3d 1194, 1197 n. 1 (9th 

Cir. 1998). 

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grossly unfair. (See Order at 26: 22–24.) Defendant misses the point. Indeed, no new actions are 

alleged. The relevant allegations focus on the disparity in knowledge among the parties, not a new 

discrete action or series of actions undertaken by defendant. Here, the additional facts regarding 

disparity in knowledge among the parties plausibly render the same actions grossly unfair. To 

determine whether plaintiffs alleged properly that defendant’s actions were grossly unfair, i.e. that 

they resulted in “unfairness [that] was glaringly noticeable, flagrant, complete and unmitigated,” 

the Court should examine “the entire transaction,” including disparity in expertise and knowledge. 

Sanchez v. Guerrero, 885 S.W.2d 487, 493 (Tex. App. 1994). Taken as true, plaintiffs’ new 

allegations of superior knowledge and expertise, as well as defendant’s use of that knowledge to 

harm plaintiffs, together support a finding that the 3AC plausibly alleges conduct that was grossly 

unfair. (See 3AC ¶¶ 174–76.) The Court finds that the 3AC states an actionable claim under Tex. 

Bus. & Com. Code section 17.50(a)(3). Defendant’s motion on this ground is similarly DENIED. 

IV. CONCLUSION

Based upon the foregoing, the Court (i) GRANTS defendant’s motion to dismiss the common 

law claims in Counts 1, 2, and 3 to the extent claims under the laws of the unrepresented thirtyeight states are asserted, on grounds that plaintiffs do not have Article III standing to assert such 

claims, but (ii) DENIES defendant’s motion to dismiss the TDTPA claim brought under Tex. Bus. & 

Com. Code sections 17.50(a)(1) and 17.50(a)(3). 

This Order terminates Docket Number 102. 

IT IS SO ORDERED.

Date: July 29, 2016

 _______________________________________ 

 YVONNE GONZALEZ ROGERS

 UNITED STATES DISTRICT COURT JUDGE

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