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In re Plavix Marketing, Sales Practices And Products Liability Litigation (No. II)

United States District Court, D. New Jersey

May 30, 2018

IN RE: PLAVIX MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION (NO. II) This Document Relates to: UNITED STATES OF AMERICA, et al., ex rel. JKJ Partnership 2011, LLP, Plaintiffs,
v.
SANOFI AVENTIS, U.S., LLC, et al., Defendants. Civil Action No. 11-6476 (FLW)

          OPINION

          FREDA L. WOLFSON, UNITED STATES DISTRICT COURT.

         Before the Court is the motion of Defendants Sanofi-Aventis U.S., LLC; Sanofi U.S. Services, Inc.; Aventis Pharmaceuticals, Inc.; Bristol-Myers Squibb Company; and Bristol-Myers Squibb Sanofi Pharmaceuticals Holding Partnership (collectively “Defendants”), to dismiss the Second Amended Complaint of qui tam Plaintiff and relator JKJ Partnership 2011, LLP (“JKJ”), for lack of jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(1), and for failure to state a claim, pursuant to Fed.R.Civ.P. 12(b)(6). Defendants contend (i) that JKJ's claims based on conduct occurring prior to the 2010 amendment to the False Claims Act (“FCA”) by the Patient Protection and Affordable Care Act (“PPACA”) are barred by the jurisdiction-stripping, pre-PPACA version of the FCA's “public disclosure bar, ” 31 U.S.C. § 3730(e)(4), because, inter alia, JKJ is not an original source of information learned, in the first instance, by JKJ's members before JKJ's formation; (ii) that JKJ's claims based on conduct occurring after the 2010 amendment fail to state a claim under the non-jurisdictional, post-PPACA version of the public disclosure bar for the same reasons; and (iii) that all of JKJ's claims in the Second Amended Complaint are barred by the FCA's “first-to-file bar, ” 31 U.S.C. § 3730(b)(5), because of the impermissible replacement of one of JKJ's members, between the filing of the Original Complaint in 2011 and the filing of the Second Amended Complaint in 2017. JKJ opposes the motion, and, in the alternative, cross-moves to file a Third Amended Complaint, under Fed.R.Civ.P. 15(a)(2), 15(c)(1)(C), and 17(a)(3), naming its individual members as the realtor plaintiffs. For the reasons that follow, the Court finds that the public disclosure bar does not apply to JKJ's claims, that the first-to-file bar precluded, and prevents, JKJ from proceeding as the plaintiff in this action after its change in membership, and that the first-to-file bar prevents the joinder of JKJ's members as additional plaintiffs in this action, rendering JKJ's requested amendment futile. The Second Amended Complaint is therefore dismissed and JKJ's cross motion for leave to amend is denied.

         I. FACTUAL BACKGROUND & PROCEDURAL HISTORY

         On October 26, 2011, two doctors and a Sanofi sales representative formed JKJ, a Delaware Limited Partnership. JKJ was formed for the purpose of bringing the present litigation. On November 4, 2011 - nine days after it was formed - JKJ filed the Original qui tam Complaint, identifying its partners anonymously as “Partner A, ” “Partner B, ” and “Partner C.” Original Compl., ¶¶ 20-24. In the Original Complaint, JKJ alleged, inter alia, that

the Sanofi Defendants failed to disclose material adverse efficacy data regarding Plavix®, as required by 21 C.F.R. § 314.80 (governing post-marketing reporting of adverse drug experiences), causing physicians to prescribe, and Government Programs to reimburse, Plavix® for millions of patients who were genetically predisposed to experience diminished or no responsiveness to Plavix®, rendering it little more than a placebo and placing the patients at significant risk.

Id. at ¶ 5.

         On February 22, 2017, JKJ filed a Second Amended Complaint, further developing its claim of Plavix's ineffectiveness for certain patients based on their genetic makeup. In the Second Amended Complaint, JKJ alleges that

Defendants promoted [Plavix] as the standard of care for all antiplatelet and antithrombotic patients-including patients who received stents-notwithstanding their knowledge that the drug had little or no effect, and was therefore medically contraindicated, for over 30% of patients. . . . Defendants knew, but concealed the fact that their blockbuster drug Plavix had no demonstrable pharmacodynamics effect for many patients who had been prescribed the drug. They also knew that these “non-responders” or “low responders” were not entirely genetically random. Individuals whose ethnic background was African-American or Asian-American had a much higher risk of non-response to Plavix than other ethnicities. . . . Defendants referred to this as the Plavix “Variability of Response” (or “VOR”) issue.

         Second Amended Compl. (“SAC”), ¶¶ 1-2 (emphasis in original).

         In that respect, JKJ claims that Defendants made affirmative misrepresentations by “systematically and deliberately promot[ing] Plavix through false and misleading advertising [and other marketing materials] that overstated efficacy, and minimized critical adverse event and risk information. Defendants would brand this their ‘Expand and Protect' strategy.” SAC, ¶ 249. Indeed, JKJ avers that Defendants created a logo used on Sales and Marketing material to stress and reflect this strategy. Id. According to JKJ, based upon such a strategy, Defendants “protected” Plavix by selling the drug's safety and efficacy in all patients in spite the fact that Defendants knew it was false. Id.

         At some point between the filing of the Original Complaint in November 2011, and the filing of the Second Amended Complaint in February 2017, Partner B left the JKJ partnership, and Dr. Paul A. Gurbel joined the JKJ partnership to replace him or her. After the substitution in membership came to light, the Court, at an August 9, 2017 status conference, asked the parties to brief whether JKJ was a proper relator capable of continuing the litigation. In response to the Court's inquiry, on October 11, 2017, Defendants filed a motion to dismiss, pursuant to Fed.R.Civ.P. 12(b)(1) and Fed.R.Civ.P. 12(b)(6). In their motion, Defendants argue that, (i) if JKJ is construed as the relator in its own right, the FCA's public disclosure bar precludes JKJ's claims, [1](ii) if JKJ is construed as a pass-through entity for its members, who are the real relators in this action, then JKJ lacks Article III associational standing to proceed as the plaintiff in this case, [2](iii) JKJ's continuation as the plaintiff after the substitution of Dr. Gurbel for Partner B is prohibited by the FCA's first-to-file bar, and (iv) any curative amendment to add JKJ's members as plaintiff relators is also prohibited by the first-to-file bar. Also, on October 11, 2017, JKJ opposed Defendants' motion and cross-moved, in the alternative, for leave to amend in order to name its current members, as well as JKJ, as the relator plaintiffs in this action. The parties' cross motions have been fully briefed and are ripe for the Court's consideration.

         II. STANDARD OF REVIEW

         A. Federal Rule of Civil Procedure 12(b)(1)

         Under Federal Rule of Civil Procedure 12(b)(1), a court must grant a motion to dismiss if it lacks subject matter jurisdiction to hear a claim. See Fed. R. Civ. P. 12(b)(1). “A motion to dismiss for want of standing is also properly brought pursuant to Rule 12(b)(1), because standing is a jurisdictional matter.” Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007); see St. Thomas-St. John Hotel & Tourism Ass'n v. Gov't of the U.S. Virgin Islands, 218 F.3d 232, 240 (3d Cir. 2000) (“The issue of standing is jurisdictional.”). “On a motion to dismiss for lack of standing, the plaintiff bears the burden of establishing the elements of standing, and each element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Ballentine, 486 F.3d at 810 (citations and internal quotation marks omitted).

         In evaluating a Rule 12(b)(1) motion to dismiss, the court must first determine whether the motion “presents a ‘facial' attack or a ‘factual' attack on the claim at issue, because that distinction determines how the pleading must be reviewed.” Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 357 (3d Cir. 2014) (quoting In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012)). “A facial 12(b)(1) challenge, which attacks the complaint on its face without contesting its alleged facts, is like a 12(b)(6) motion in requiring the court to ‘consider the allegations of the complaint as true.' ” Hartig Drug Co. Inc. v. Senju Pharm. Co., 836 F.3d 261, 268 (3d Cir. 2016) (citation omitted); see Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000), modified by Simon v. United States, 341 F.3d 193 (3d Cir. 2003) (observing that in reviewing a facial challenge, which contests the sufficiency of the pleadings, “the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff.”). A factual challenge, on the other hand, “attacks allegations underlying the assertion of jurisdiction in the complaint, and it allows the defendant to present competing facts.” Hartig Drug Co., 836 F.3d at 268. The “trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case” and “the plaintiff will have the burden of proof that jurisdiction does in fact exist.” Petruska v. Gannon Univ., 462 F.3d 294, 302 n. 3 (3d Cir. 2006) (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977)).

         “Therefore, a 12(b)(1) factual challenge strips the plaintiff of the protections and factual deference provided under 12(b)(6) review.” Hartig Drug Co., 836 F.3d at 268.

         B. Federal Rule of Civil Procedure 12(b)(6)

         In reviewing a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6), “courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (internal quotation marks and citation omitted). While Federal Rule of Civil Procedure 8(a) does not require that a complaint contain detailed factual allegations, “a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citation omitted). Thus, to survive a Rule 12(b)(6) motion to dismiss, the Complaint must contain sufficient factual allegations to raise a plaintiff's right to relief above the speculative level, so that a claim “is plausible on its face.” Id. at 570; Phillips v. Cty. of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008). “A claim has facial plausibility 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). While the “plausibility standard is not akin to a ‘probability requirement, ' . . . it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citation omitted).

         To determine whether a plaintiff has met the facial plausibility standard mandated by Twombly and Iqbal, courts within the Third Circuit engage in a three-step progression. Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010). First, the reviewing court “outline[s] the elements a plaintiff must plead to a state a claim for relief.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012). Next, the court “peel[s] away those allegations that are no more than conclusions and thus not entitled to the assumption of truth.” Id. Finally, where “there are well-pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. This last step of the plausibility analysis is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

         III. ANALYSIS

         A. Public Disclosure Bar

         Defendants argue that JKJ's claims are precluded by the FCA's public disclosure bar, which limits a plaintiff's ability to bring claims based on information previously disclosed in, inter alia, government reports and investigations; public hearings, including court proceedings; and the news media. The FCA was amended in 2010, altering the public disclosure bar's limitation on claims. JKJ's claims cover a period spanning both prior to and after the amendment, requiring the Court to apply both versions of the statute. Before its 2010 amendment, the FCA's “public disclosure bar, ” 31 U.S.C. § 3730(e)(4)(A), provided:

No court shall have jurisdiction over an action under this section based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a congressional, administrative, or Government Accounting Office [sic] report, hearing, audit, or investigation, or from the news media, unless the action is brought by the Attorney General or the person bringing the action is an original source of the information.

         Under that version of the statute, an “original source” under 31 U.S.C. § 3730(e)(4)(B) was defined as:

an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the Government before filing an action under this section which is based on the information.

31 U.S.C. § 3730(e)(4)(B); See, e.g., U.S. ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 518-19 (3d Cir. 2007).

         In 2010, Congress amended the bar as part of the PPACA, such that it now reads as follows:

(4)(A) The court shall dismiss an action or claim under this section, unless opposed by the Government, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed-
(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is a party;
(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, ...

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