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
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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,
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“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
3
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.
4
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
5
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
6
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:
7
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
8
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
9
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
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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
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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
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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
13
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
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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.
15
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”),
16
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.
17
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
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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
19
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
20
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
21
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
22
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
23
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
24
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,
25
“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.
26
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,
27
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
28
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.
29
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
The State of Louisiana and its instrumentalities were also originally named as
2
plaintiffs in the complaint, but they voluntarily dropped out of the litigation on May 21,
2008.
30
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
31
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’
32
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
Plaintiffs subsequently chose to dismiss their claims brought pursuant to the
3
laws of sixteen other states in order to permit the immediate appeal of the district
court’s summary judgment decision.
33
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).
34
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,
In every case, a plaintiff seeking to certify a class must also satisfy all the
4
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.
35
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
36
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
37
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[]
Even if the plaintiff’s or a third‐party’s reliance on the defendant’s
5
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.
38
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
39
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
40
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
41
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
42
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
43
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
44
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
45
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
46
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
There are numerous other problems with Plaintiffs’ theory of causation, which
6
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
47
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.
48
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
49
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
Plaintiffs concede that Ketek’s final drop‐off in sales was partly caused by
7
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.
50
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
51
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
Even the drugs that we consider most benign can carry surprisingly serious
8
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).
52
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.
53
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.
54
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
55
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
56
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).
57
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
58
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
When asked how much of the decline in Ketek’s sales was attributable to
10
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.
59
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
60
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
61
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,
62
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
63
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.
We do not express any view on what evidence Plaintiffs might have presented
11
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.
64
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.
65