Opinion ID: 799929
Heading Depth: 3
Heading Rank: 4

Heading: Consolidated Putative Class Action

Text: Following Schering's settlement with the Government, various civil suits were filed across the country by consumer plaintiffs who were prescribed, consumed, and paid for the drugs, and by TPPs who paid for the Subject Drugs prescribed to their plan members. The Judicial Panel on Multi-District Litigation ordered the cases to be transferred to the District of New Jersey, where Schering is incorporated, and consolidated pursuant to 28 U.S.C. § 1407. The District Court directed that the various actions transferred to it be consolidated for pretrial management and that a consolidated complaint on behalf of all plaintiffs be filed. In December 2007, the nine named plaintiffs (the four TPPs and five patients identified in footnotes 1 and 2, supra ) filed a Consolidated Class Action Complaint (the Complaint) on behalf of themselves and others similarly situated, alleging that the Defendants engaged in illegal promotion of the Subject Drugs in violation of the federal and New Jersey RICO statutes (Counts I and II), and the New Jersey Consumer Fraud Act (NJCFA), N.J. Stat. Ann. § 56:8-1, et seq. (Count III). The Complaint also asserted common law claims for unjust enrichment (Count IV); civil conspiracy (Count V); fraud (Count VI); negligent misrepresentation (Count VII); aiding and abetting breach of fiduciary duty (Count VIII); and equitable accounting (Count IX). In an Order and Opinion issued on July 10, 2009, the District Court dismissed the Complaint in its entirety pursuant to Fed. R.Civ.P. 9(b), 12(b)(1) and 12(b)(6), for failure to state a claim and lack of standing, but granted leave to file an amended complaint. In re Schering-Plough Corp. Intron/Temodar Consumer Class Action, Slip Copy, 2009 WL 2043604 (D.N.J.2009) ( Schering I ). The Court found that the Complaint lacked sufficient factual allegations to plausibly assert an injury-in-fact that was cognizable under any of the asserted causes of action and fairly traceable to the Defendants' alleged misconduct. In September 2009, two separate Amended Complaints were filed, one by Montgomery and the other by the four TPP plaintiffs identified in footnote 1, supra. Montgomery filed an Amended Civil Consumer Class Action Complaint (MAC) individually and on behalf of a putative nationwide class of similarly situated patient-consumers who purchased, were reimbursed, and/or paid for any of the Subject Drugs during the class period. The MAC asserted violations of the Washington State Consumer Protection Act, Wash. Rev.Code § 19.86.010, et seq. (Count I), and the consumer protection statutes of the remaining 49 states, the District of Columbia, and Puerto Rico (Count II), as well as claims of civil conspiracy (Count III), aiding and abetting breach of fiduciary duty (Count IV), and unjust enrichment (Count V). The TPP plaintiffs filed an Amended Consolidated Class Action Complaint (TPP Complaint) on behalf of a proposed class of health and welfare funds and other TPPs who paid any portion of the purchase price for the Subject Drugs during the class period. The TPP Complaint asserted violations of the federal and New Jersey RICO statutes, (Counts I and II), in addition to common law claims for intentional interference with contractual relations (Count III) and unjust enrichment (Count IV). The Plaintiffs' Amended Complaints allege that Schering engaged in a widespread marketing campaign that employed illegal techniques to promote prescriptions of the Subject Drugs for off-label uses. They contend that these illegal practices included: (1) promoting certain of the Subject Drugs for off-label uses; (2) using false and misleading statements to promote certain of the Subject Drugs as effective, safe, and cost-effective for off-label uses; and (3) providing physicians with disguised and undisguised bribes, kickbacks and other illegal inducements to encourage them to prescribe the Subject Drugs for off-label uses. Plaintiffs claim that Schering used a variety of methods to effectuate this marketing scheme and disseminate its false claims. For example, they allege that Schering trained its sales representatives to mislead medical professionals about the Subject Drugs' effectiveness for off-label uses by distorting contrary scientific data and the results of clinical studies. They also claim that the Schering sales force promoted off-label prescriptions by disseminating false and misleading statements in private sales meetings with doctors, at medical conferences, and in CME programs. Plaintiffs also assert that Schering promoted these off-label prescriptions through both disguised and undisguised bribes to induce doctors to prescribe the Subject Drugs. Plaintiffs aver that Schering's unlawful marketing practices caused physicians to prescribe the Subject Drugs for off-label uses instead of equally effective alternative treatments that were approved for the prescribed uses or no medication at all. They assert that these marketing techniques led to a significant increase in prescriptions of the Subject Drugs for off-label uses, and contend that this caused the Plaintiffs ascertainable loss because they paid hundreds of millions, if not billions, of dollars for the Subject Drugs that they otherwise would not have paid. On October 28, 2009, Schering filed separate motions to dismiss each Amended Complaint. On June 9, 2010, the District Court issued separate Orders and Opinions (collectively, Schering II ) granting both motions. The Court dismissed the TPP Complaint because it failed to adequately plead the injury-in-fact and causation elements required to establish standing to assert its RICO, interference with contractual relations, and unjust enrichment claims. The Court also held that even if the Complaint had established standing to pursue non-RICO claims, its two common law claims of interference with contractual relations and unjust enrichment would still fail under Rule 12(b)(6). The Court dismissed the MAC for failure to show a causal link between Montgomery's alleged injury and Schering's alleged misconduct.