In the
United States Court of Appeals
For the Seventh Circuit
No. 10-1686
P IRELLI A RMSTRONG T IRE C ORPORATION
R ETIREE M EDICAL B ENEFITS T RUST,
Plaintiff-Appellant,
v.
W ALGREEN C OMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 09 cv 2046—Virginia M. Kendall, Judge.
A RGUED S EPTEMBER 30, 2010—D ECIDED JANUARY 21, 2011
Before F LAUM, M ANION, and T INDER, Circuit Judges.
F LAUM, Circuit Judge. The plaintiff in this case,
Pirelli Armstrong Tire Corporation Retiree Medical
Benefits Trust (“Pirelli”), initiated a putative class action
under the Illinois Consumer Fraud and Deceptive Busi-
ness Practices Act. For tax law purposes, Pirelli is a vol-
untary employees’ beneficiary association, a tax exempt
trust that exists to provide specified benefits to members
2 No. 10-1686
of its related association. For our purposes, however,
Pirelli is a third-party payor (typically one’s insurance
company) that pays pharmacies for the portion of a drug
price that exceeds its members’ co-payments. Pirelli’s
lawsuit maintains that the defendant, Walgreen Company
(“Walgreens”), systematically took prescriptions that
were written for cheap forms of two popular drugs and
illegally filled the prescriptions with expensive forms.
The district court granted Walgreens’ motion to dismiss,
ruling that Pirelli failed to meet the heightened pleading
standard of Federal Rule of Civil Procedure 9(b). We
affirm the judgment of the district court.
I. Background
When a patient takes a prescription to a pharmacy,
the pharmacy has some maneuvering room: it generally
can fill the prescription with either the specified drug
or a generic, “bioequivalent” version of the drug. Under
Illinois law, however, a pharmacy cannot take a pres-
cription for the tablet form of a drug and fill it with
the capsule form of the drug, or vice-versa—the practice
is forbidden by statute and the differences in form
might affect how a person absorbs the active ingredients.
Warner-Lambert Co. v. Shalala, 202 F.3d 326, 327-28 & n.2
(D.C. Cir. 2000) (providing an overview of the reg-
ulatory regime and its implications); 225 ILCS 85/25
(a pharmacist may substitute only drugs that the Food
and Drug Administration (“FDA”) has determined to be
therapeutically equivalent); cf. also B.G. Charles & G.A.G.
No. 10-1686 3
Mogg, Comparative in Vitro and in Vivo Bioavailability of
Naproxen from Tablet and Caplet Formulations, 15 B IOPHARM .
& D RUG D ISPOSITION 121, 125 & Figure 1 (1994).
Pirelli alleges that Walgreens, a company that operates
roughly 7,000 pharmacies nationwide, violated the reg-
ulatory regime in Illinois with respect to two different
drugs. One drug was generic Zantac (“Ranitidine”). The
other was generic Prozac (“Fluoxetine”). Walgreens
allegedly took prescriptions that called for the less costly
form of each drug and filled them with the more costly
form. Consumers, responsible for only the co-pay, were
none the wiser. But Pirelli unwittingly reimbursed
Walgreens for costly forms of drugs that were never
prescribed.
That is the shorthand version; to explain how the
alleged scheme worked, Pirelli’s complaint provides
considerable detail about the drug approval process
before the FDA, the drug reimbursement process, and
the industry actors involved. We can summarize. Pirelli,
as a third-party payor, used a Pharmacy Benefit
Manager (“PBM”) to process, settle disputes over, and pay
pharmacies for prescriptions. Essentially, the PBM is a go-
between that processes and smoothes over transactions
between the third-party payor (Pirelli) and the pharmacy
(Walgreens). The PBM is not only a middleman, how-
ever; it establishes a list of Maximum Allowable Costs
(“MAC”) for various drugs. The MAC list gets turned over
to pharmacies like Walgreens. The list sets a reimburse-
ment price—effectively placing a ceiling on the price of
specified drugs. For drugs, or dosage forms of drugs, that
are not on the MAC list, the reimbursement price is based
4 No. 10-1686
on a benchmark, called the Average Wholesale Price
(“AWP”), which comes directly from a drug’s manufac-
turer. Predictably, when a drug is priced based on
the AWP, the reimbursement is higher than when reim-
bursement is based on the MAC price. Put another way,
a pharmacy makes more money when it sells a drug
whose reimbursement is governed by the AWP rather
than by the MAC list.
According to Pirelli, Walgreens took advantage of the
pricing scheme to commit fraud. Both Ranitidine tablets
and Fluoxetine capsules were the most popularly pre-
scribed forms of their respective drugs and were subject
to reimbursement based on the cheaper MAC list. But,
because the more expensive forms of the drugs were
rarely prescribed, there were no MAC-list prices for
Ranitidine capsules and Fluoxetine tablets. Since mid-2001,
Walgreens adopted a policy of filling prescriptions for
Ranitidine tablets with the more costly capsule form.
Likewise, Walgreens filled prescriptions for Fluoxetine
capsules with the more costly tablet form. Each time it
filled a prescription, the theory goes, Walgreens repre-
sented to the PBM that it had received a prescription
for the costly form of the drug; the PBM passed on the
misrepresentation to Pirelli, who then reimbursed
Walgreens at the more expensive AWP price—two to
four times higher than the MAC price.
No. 10-1686 5
That is a lot of detail 1 , although detail (“particularity”) is
what a plaintiff needs in alleging fraud to satisfy the
requirements of the Federal Rules of Civil Procedure.
The particularity requirement ensures that plaintiffs
do their homework before filing suit and protects de-
fendants from baseless suits that tarnish reputations.
And the requirement dovetails with lawyers’ ethical
obligations to ensure they conduct a pre-complaint
inquiry before signing off on their clients’ contentions.
What sort of pre-complaint inquiry is evidenced by
Pirelli’s complaint? The complaint points to three grounds
for its suspicion that Walgreens defrauded it. The first
ground is a “preliminary review” of Pirelli’s reimburse-
ment data: during the course of the (apparently nation-
wide) review, Pirelli discovered “several instances
in which [Pirelli] paid Walgreens for the more expen-
sive dosage forms, when lesser [sic] expensive dosage
form [sic] were available.” That allegation, at least in a
vacuum, is not impressive. The data include a five-year
1
Perhaps more than we needed in some respects, particularly
in terms of minutiae about the drug industry and its
regulatory workings and commercial contours. See, e.g., Bankers
Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 683 (7th Cir. 1992)
(providing a simple formulation of how fraud might have
been alleged in the case, which in turn shows that the require-
ment in the rules for fraud averments are not at war with
the rule that complaints be succinct). In this case, however,
the allegations were hefty but not confusing, so we note
only that Pirelli might have saved some paper, or used it to
address the deficiencies we identify below.
6 No. 10-1686
window, and one would expect some number of instances
when the more expensive forms of the drugs were pre-
scribed: Pirelli found 11 members on whose behalf it
reimbursed Walgreens for the more expensive form of
Ranitidine and just a single member on whose behalf
it reimbursed Walgreens for the more expensive form
of Fluoxetine. Only one member’s reimbursements oc-
curred in Illinois. Moreover, the fact that the drug compa-
nies make multiple forms suggests that there are markets
for them. And since the body may absorb capsules
and tablets differently, there could be medical reasons
for preferring one form of the drug over another in
specific cases.
The more interesting aspect of Pirelli’s preliminary look
comes from a subset of its data. Pirelli found three mem-
bers—one in Illinois, one in Louisiana, and one in
Iowa—who filled some prescriptions at Walgreens and
others at different pharmacies. The data are presented
in tables for each of the three members; the tables list
the date of each transaction, the pharmacy involved in
the transaction, and the dosage form for which Pirelli
reimbursed the pharmacy. The three histories show
that non-Walgreens pharmacies filled each member’s
Ranitidine prescription with tablets, while Walgreens
filled the same member’s prescription with more costly
capsules. For example, Pirelli’s exhibit shows that its
single Illinois patient had 16 prescriptions for Ranitidine
filled at 3 different pharmacies. Only Walgreens filled
prescriptions with the more costly form of the drug. In
each case, one cannot see if the reimbursements were
made under the same prescription, although it does
No. 10-1686 7
appear that something suspicious was happening: the
transactions involving Walgreens are sandwiched be-
tween transactions from other pharmacies, and no one
has suggested that a person might receive prescriptions
for both the tablet form of a drug and the capsule form.2
The pattern of reimbursements suggests that the three
members were supposed to get the cheaper form of
Ranitidine and they did not, either the result of a
prescription-filling error or fraud.
The second ground for Pirelli’s suspicion, and where
Pirelli gets most of its information about how the
alleged fraud worked, is a complaint filed in a 2003 qui tam
action in the Northern District of Illinois (the “qui tam
case”). The allegations in that whistleblower suit, based
on accusations made by a pharmacist, indicate that
“[u]pon receiving a [Ranitidine] tablet prescription, Wal-
greens’ pharmacy personnel could not process the orders
as written, but instead filled the prescriptions with cap-
sules.” The pharmacist in question did not actually
work for Walgreens. Rather, the pharmacist worked
for other pharmacies; when he would receive prescrip-
tions that were being transferred from Walgreens to
one of the pharmacies where he worked, the Wal-
greens pharmacists “regularly indicated” how their
prescription-filling system functioned. See Compl. ¶¶ 16-
17, United States ex rel. Lisitza v. Walgreens Co., No. 03-cv-
744 (N.D. Ill. Jan. 31, 2003).
2
Pirelli does not know what form the doctors actually pre-
scribed for these members; it says that it lacks access to the
prescriptions, and Walgreens does not say otherwise.
8 No. 10-1686
The third ground for Pirelli’s suspicion comes from an
investigation that was conducted by another PBM, not
the one that Pirelli used. The PBM looked at transac-
tions that it had facilitated with Walgreens, drawing
most of its data from St. Louis, Boston, and Phoenix. The
investigation indicated that, for the transactions that
the PBM facilitated, Walgreens filled an overwhelmingly
large percentage (97 percent) of Ranitidine prescrip-
tions with capsules, while every other pharmacy filled
prescriptions for Ranitidine with capsules at a meager
rate (3 percent). Given the relative popularities of the
two dosage forms, the data indicate that something
suspicious was happening and that clerical errors do not
dispel the suspicion. The PBM’s investigation was the
basis of a lawsuit (the “ESI suit”).
In 2009, Pirelli filed a suit of its own. Pirelli initiated
a putative class action on behalf of all third-party
payors who reimbursed Walgreens for Ranitidine
capsules, Fluoxetine tablets, or both, between 2001 and
2005. Pirelli initially contended that Walgreens’ actions
violated 35 different states’ unfair or deceptive acts
laws, including the Illinois Consumer Fraud and Decep-
tive Business Practices Act, 815 ILCS 505/1, et seq. In
addition to the fraud claims, Pirelli brought an unjust
enrichment claim under Illinois law. However, the laws
of all of the states besides Illinois have been pruned
from the litigation: the parties litigated the case as if
Illinois law applied to Pirelli’s claims, the district court
indicated that it was considering this only as an Illinois
case, and Pirelli has not attempted to expand the scope
of the litigation.
No. 10-1686 9
Walgreens moved to dismiss the complaint, and the
district court granted the motion, first without preju-
dice and then with prejudice. The district court rea-
soned that Pirelli did not adequately meet the height-
ened pleading requirement of Federal Rule of Civil Pro-
cedure 9(b) because Pirelli did not “provide facts
showing that any individual at a Walgreens store made
a misrepresentation or concealed a material fact.” More-
over, relying on case law from this circuit, the district
court observed that Pirelli had failed sufficiently to
allege that it had been injured by Walgreens’ fraudulent
scheme, a prerequisite to recovery under Illinois law.
Finally, the district court concluded that the complaint
in the qui tam case “help[ed] lay the foundation for
Pirelli’s argument about Walgreens’ corporate policy, [but
did] not substantiate Pirelli’s claim that it was itself
defrauded by Walgreens.” Thus, the court ruled that
the complaint failed to plead fraud with sufficient par-
ticularity as the federal rules require.
II. Discussion
The sufficiency of a complaint is a question of law
that we decide without deference to the district court’s
ruling. Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 395
(7th Cir. 2009). Although we do not adopt all of the
district court’s reasoning, the complaint was appro-
priately dismissed. Pirelli failed to plead adequate
grounds for its suspicions of fraud, and its unjust enrich-
ment claim was hitched to its fraud claim. The short-
comings of the fraud claim doomed the unjust enrich-
ment claim.
10 No. 10-1686
A. Pirelli’s Fraud Claim
Pirelli maintains that Walgreens’ alleged scheme vio-
lated the Illinois Consumer Fraud and Deceptive
Business Practices Act (“ICFA”). The ICFA makes it
unlawful to use deception or fraud in the conduct of
trade or commerce.3 In addition to its general proscrip-
tions, the act provides a right of action for a person
who suffers “actual damage” as a result of a violation.
815 ILCS 505/10a(a). When a plaintiff in federal court
alleges fraud under the ICFA, the heightened pleading
standard of Federal Rule of Civil Procedure 9(b) ap-
plies. Davis v. G.N. Mortg. Corp., 396 F.3d 869, 883 (7th
Cir. 2005).
The concepts involved are relatively straightforward,
but this appeal implicates important wrinkles that
merit discussion. Under Rule 9(b) of the Federal Rules
of Civil Procedure, a party who alleges fraud or mistake
“must state with particularity the circumstances con-
stituting fraud or mistake.” As one district court has
noted, the particularity requirement of Rule 9(b) is de-
3
The provision provides: “Unfair methods of competition
and unfair or deceptive acts or practices, including but not
limited to the use or employment of any deception, fraud,
false pretense, false promise, misrepresentation or the conceal-
ment, suppression or omission of any material fact, with
intent that others rely upon the concealment, suppression or
omission of such material fact, or the use or employment of
[specified practices] in the conduct of any trade or commerce
are hereby declared unlawful . . . .” 815 ILCS 505/2 (foot-
notes omitted).
No. 10-1686 11
signed to discourage a “sue first, ask questions later”
philosophy. Berman v. Richford Indus., Inc., 1978 WL 1104,
at *5 (S.D.N.Y July 28, 1978); see also Fidelity Nat’l Title
Ins. Co. of N.Y. v. Intercounty Nat’l Title Ins. Co., 412 F.3d
745, 748-49 (7th Cir. 2005) (the particularity require-
ment “forces the plaintiff to conduct a careful pretrial
investigation” and minimizes the risk of extortion that
may come from a baseless fraud claim); Kennedy v.
Venrock Assocs., 348 F.3d 584, 594 (7th Cir. 2003) (the
particularity requirement protects defendants from
“privileged libel”).
In adding flesh to the bones of the word particularity,
we have often incanted that a plaintiff ordinarily must
describe the “who, what, when, where, and how” of the
fraud—“the first paragraph of any newspaper story.”
United States ex rel. Lusby v. Rolls-Royce Corp., 570
F.3d 849, 854 (7th Cir. 2009). Yet, because courts and
litigants often erroneously take an overly rigid view of
the formulation, we have also observed that the
requisite information—what gets included in that first
paragraph—may vary on the facts of a given case. Emery
v. Am. Gen. Fin., Inc., 134 F.3d 1321, 1324 (7th Cir. 1998)
(flexibility when information lies outside of plaintiff’s
control); In re HealthCare Compare Corp. Secs. Litig., 75
F.3d 276, 285 (7th Cir. 1996) (Ripple, J., dissenting)
(noting that reasonable minds can and will differ on the
adequacy of a given fraud averment); see also Shushany
v. Allwaste, Inc., 992 F.2d 517, 521 (5th Cir. 1993) (“What
constitutes ‘particularity’ will necessarily differ with the
facts of each case . . . .”). The twin demands of detail
and flexibility, though in tension with one another, make
12 No. 10-1686
sense in light of the competing purposes of the federal
rules. Heightened pleading in the fraud context is
required in part because of the potential stigmatic injury
that comes with alleging fraud and the concomitant
desire to ensure that such fraught allegations are not
lightly leveled. At the same time, the adoption of the
Federal Rules of Civil Procedure constituted a self-con-
scious departure from prior pleading regimes that em-
phasized form for form’s sake. See also 2 James Wm. Moore,
M OORE’S F EDERAL P RACTICE § 9.03[1][b], at 9-18 (3d ed.
2010) (although “plaintiffs are not absolutely required
to plead the specific date, place, or time of the fraudulent
acts,” they still must “use some alternative means
of injecting precision and some measure of substantia-
tion into their allegations of fraud”); David Marcus, The
Federal Rules of Civil Procedure and Legal Realism as a Juris-
prudence of Law Reform, 44 G A. L. R EV. 433, 471 (2010)
(contending that Charles Clark, one of the primary
drafters and exponents of the federal rules, used code-
and common-law pleading instrumentally as the “foil[s]
for his procedural jurisprudence”).
Here is the wrinkle and the rub. A plaintiff who
alleges fraud can provide all the detail in the world, but
does not have unlimited leeway to do so on “information
and belief.” When a plaintiff sets out allegations on in-
formation and belief, he is representing that he has a
good-faith reason for believing what he is saying, but
acknowledging that his allegations are “based on second-
hand information that [he] believes to be true.” B LACK’S
L AW D ICTIONARY 783 (7th ed. 1999); see also Pirraglia v.
Novell, Inc., 339 F.3d 1182 (10th Cir. 2003) (quoting
No. 10-1686 13
B LACK’S L AW D ICTIONARY 779 (6th ed. 1990)). Although
Pirelli did not use the phrase “information and belief” in
its complaint, its allegations fall squarely within the
definition of the term. See also Dey v. Cont’l Cent. Credit, 88
Cal. Rptr. 3d 241, 244 n.1 (Cal. Ct. App. 2008) (allegations
based on hearsay constitute information and belief).
As counsel for Pirelli stated at oral argument, “We’re
secondhand on a lot of this information . . . we’re picking
up from the qui tam complaint . . . adopting these allega-
tions.”
That insight about Pirelli’s allegations has conse-
quences. Even though it sounds more like an ethical
issue than an evaluation of the amount of detail in a
complaint, we have ruled that a plaintiff generally
cannot satisfy the particularity requirement of Rule 9(b)
with a complaint that is filed on information and belief.
Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 683
(7th Cir. 1992) (“Even before Rule 11 was amended to
require [reasonable pre-complaint inquiry], and a fortiori
since, it was understood that the duty to plead the cir-
cumstances constituting fraud with particularity could
not be fulfilled by pleading those circumstances on ‘in-
formation and belief[.]’ ”). The general rule that fraud
cannot be pled based on information and belief is not
ironclad, however: the practice is permissible, so long
as (1) the facts constituting the fraud are not acces-
sible to the plaintiff and (2) the plaintiff provides “the
grounds for his suspicions.” Uni*Quality, Inc. v. Infotronx,
Inc., 974 F.2d 918, 924 (7th Cir. 1992); Bankers Trust, 959
F.2d at 684.
14 No. 10-1686
Here, Pirelli’s complaint skips the phrase “information
and belief” and just provides the grounds for its suspi-
cions: besides its preliminary look at its own reimburse-
ment data, the complaint relies on the ground that
other people have sued Walgreens and detailed their
allegations. But when someone alleges fraud based on
information and belief, not just any grounds will do. The
grounds for the plaintiff’s suspicions must make the
allegations plausible, even as courts remain sensitive to
information asymmetries that may prevent a plaintiff
from offering more detail. See In re Rockefeller Center
Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002); see
also Lusby, 570 F.3d at 854 (concluding that the knowl-
edge evinced in a qui tam relator’s fraud complaint sup-
ported a plausible inference of fraud in that case). Al-
though the federal rules are flexible in this realm, allega-
tions based on the mere filing of other lawsuits gen-
erally will not provide much in the way of plausible
corroboration of a plaintiff’s fraud. But cf. Thornton v.
Evans, 692 F.2d 1064, 1081 (7th Cir. 1982) (holding, in
a context different than Rule 9(b) but animated by
similar concerns, that “where the acts constituting fraud
and conspiracy [were] peculiarly within the defendants’
knowledge,” it was permissible to base a verification
statement on information from public filings in other
lawsuits, published government reports, and informa-
tion in the media).
It is appropriate to accord limited corroborative weigh
to allegations in another’s lawsuit. To appreciate why,
consider the 2003 qui tam case. We take judicial notice
of the complaint in the qui tam case, even though only
No. 10-1686 15
portions were cited in Pirelli’s complaint. See 520 S. Mich.
Ave. Assocs., Ltd. v. Shannon, 549 F.3d 1119, 1137 n.14
(7th Cir. 2008). Notably, the complaint of massive fraud
in the qui tam case itself is based largely on information
and belief. See, e.g., Compl. ¶¶ 20, 23, 36, United States
ex rel. Lisitza v. Walgreens Co., No. 03-cv-744 (N.D. Ill.
Jan. 31, 2003) (detailing particulars of how the fraudu-
lent scheme worked). The whistleblower (“relator” in
the statutory argot) who made the allegations did not
actually observe the prescription-filling practices. Rather,
he alleged that he was a temporary pharmacist who
was placed by an employment agency at pharmacies
other than Walgreens. He typically was placed at phar-
macies “somewhere” in Illinois. When he would receive
prescriptions that were transferred from Walgreens to
one of the pharmacies to which he was temporarily
assigned, the relator observed that Ranitidine prescrip-
tions were filled by Walgreens with the more expensive
capsules. According to the complaint, the relator asked
about this and “Walgreens pharmacists regularly
indicated that Walgreens had set up its system so
that [R]anitidine tablets were impossible to provide,
and that all [R]anitidine prescriptions were filled as
capsules despite what a physician had specifically pre-
scribed.” Id. ¶¶ 16-18. Details of what the relator
learned, such as the timeframe during which Walgreens
pharmacists would make the alleged confessions,
whether the relator’s observations were universal, or the
geographic scope of the fraud, are not fleshed out.
That is not to say that the complaint in that case
would have been inadequate as to that plaintiff. The al-
16 No. 10-1686
legations in the qui tam case were made by a whistle-
blower. The qui tam relator surely lacked access to reim-
bursement data from third-party payors that would
have allowed him to provide additional circumstances
corroborating the existence of fraud. But the same con-
clusion obviously would not apply to a third-party
payor itself. It would be odd if a complaint like this,
itself based on information and belief, could constitute
plausible corroboration for a fraud claim brought by
a third-party payor, without pointing to any meaningful
indication that the plaintiff had been injured. Imagine
the possibilities under a contrary approach: Case
Number 1 in one jurisdiction could be filed on informa-
tion and belief, which would prove insufficient. Yet, a
second litigant could bring Case Number 2, alleging a
fraud based on the complaint in Case Number 1 and
survive a motion to dismiss, having done sufficient pre-
complaint inquiry by doing little more than reading a
daily law bulletin. The outcome would be odd indeed.
The allegations in the ESI suit, too, are problematic,
though for a slightly different reason. The matter pled
in the ESI suit not only speaks to the existence of a fraud
but attempts to address whether Pirelli was injured by
a fraudulent scheme. ESI learned that an overwhelm-
ingly large percentage of prescriptions for Ranitidine
in primarily three geographic areas (none in Illinois)
was filled with the more expensive, less prescribed
dosage form of the drug. Those allegations tend to
show that ESI was injured by a fraudulent scheme.
The district court was correct not to place weight on
the allegations in the ESI suit. Again, Pirelli is relying on
No. 10-1686 17
the mere fact of someone else’s allegations, which evince
little pre-complaint inquiry on Pirelli’s part and which
speak to potential fraud in three other jurisdictions
outside of Illinois in any event. A plaintiff pleading
fraud on information and belief has to show that the
missing pieces are outside of its control. Ackerman v. Nw.
Mut. Life Ins. Co., 172 F.3d 467, 471 (7th Cir. 1999). But
Pirelli has not suggested (much less explained why) it
does not have the requisite knowledge about its reim-
bursement data to bolster its complaint with informa-
tion like that which apparently undergirds the ESI suit.
Although “Rule 9(b) is satisfied by a showing that
further particulars of the alleged fraud could have been
obtained without discovery,” Emery, 134 F.3d at 1323,
it strikes us that information like that pled in the ESI
Suit would not be the product of discovery but of a more
fulsome look at its own data.
Because it is appropriate to give limited if any weight
to the ESI suit, we turn to Pirelli’s preliminary reimburse-
ment data. Those data comprise an exhibit to Pirelli’s
complaint showing only that it reimbursed Walgreens
for the more expensive form of Ranitidine for eleven of
its members since 2001. (Only one of the members was
in Illinois.) In addition, it reimbursed Walgreens for the
more expensive form of Fluoxetine for two members
since 2001. (Neither member was in Illinois.) Pirelli has
not placed the data in context, however, and there is no
reason to think that reimbursements for a total of eleven
members nationwide is suspicious—among all of the
pharmacies with which Pirelli had dealings, did only
Walgreens seek reimbursement for the more expensive
18 No. 10-1686
form of Ranitidine over this period? Are prescriptions
for that form so exceedingly rare that the mere fact of
reimbursement should raise eyebrows? Pirelli has not
pled or argued that the answer to these questions is yes,
and common sense, cf. Ashcroft v. Iqbal, 129 S. Ct. 1937,
1950 (2009) (courts should draw on “judicial experience
and common sense” in determining whether a given
claim is plausible), says that the answer to each is likely
to be no. Nor has Pirelli provided overall reimburse-
ment figures for these drugs. The fact that drug
companies make multiple forms of drugs and that there
may be therapeutic reasons for preferring one over
another suggest that there are markets for different
forms of the drugs. In short, the data, untethered as they
are, cannot corroborate a fraud because their free-
floating nature stymies any meaningful understanding
of what the numbers mean. Absent a reason to think
otherwise, the most plausible explanation for dispensing
a well known, popular drug in any form is that it was
prescribed.
We see no reason why Pirelli, which apparently has
mined its national data in search of these transactions,
could not easily have done more. Something along the
lines of the allegations underpinning the ESI suit would
have improved Pirelli’s pleading fortunes. But a better
presentation of its data might have done the trick, too.
Putting the numbers in context could tell us whether
Pirelli also reimbursed Walgreens for the cheaper form
of the drugs in the five-year period that Pirelli examined.
To the extent it did not, the fraud claim would be sup-
ported; to the extent it did, it would be undermined.
No. 10-1686 19
Or we could see if reimbursements for the more expen-
sive forms of the drugs outstripped reimbursements for
the cheaper versions in an unlikely way. Pirelli did not
have to dance to ESI’s comprehensive statistical tune, but
did need to provide firsthand facts or data to make its
suspicions plausible. Pirelli’s de minimis showing tells us
little and does not fulfill Rule 9(b)’s purpose of “forc[ing]
the plaintiff to do more than the usual investigation
before filing his complaint.” Ackerman, 172 F.3d at 469.
In an effort to stave off dismissal, Pirelli does point to
the subset of three members from its preliminary data,
but those data, too, suffer from fatal shortcomings.
Recall that Pirelli examined a subset of the twelve mem-
bers on whose behalf it reimbursed Walgreens. Pirelli
broke out the reimbursement patterns for three of its
members who had Ranitidine prescriptions filled by
both Walgreens and other pharmacies. The records
show that Walgreens reimbursed Pirelli for the more
expensive form of Ranitidine while other pharmacies
were reimbursing Pirelli for the cheaper form. The reim-
bursements came during overlapping time periods, so
it looks as if Walgreens was either intentionally switching
prescriptions or as if there were clerical errors at work.
The small-n analysis, however, is problematic, particu-
larly given that we still lack any context for the data.
The bare fact of inconsistent reimbursements for three
patients in a five-year time period is not sufficient to
raise allegations of fraud above the speculative level.
Without knowing anything else about the overall num-
bers involved, the dearth of transactions does not tend
20 No. 10-1686
to corroborate the existence of a fraud. Indeed,
according to its complaint, Pirelli does business in at least
California, Connecticut, Florida, Illinois, Louisiana, and
Tennessee. For an entity with national reach, laboring
under a system in which prescriptions are transferred
from one pharmacy to another, see Compl. ¶ 16, United
States ex rel. Lisitza v. Walgreens, No. 03-cv-744 (N.D. Ill.
Jan. 31, 2003), one would expect some number of
prescription-filling errors. See also T O E RR IS H UMAN:
B UILDING A S AFER H EALTH S YSTEM 28-31 (Linda T. Kohn,
Janet M. Corrigan, & Molla S. Donaldson, eds., 2000)
(stating that medication related errors are among the
most common types of errors and suggesting that their
frequency may be higher than it appears because studies
focus on adverse effects from medication errors rather
than errors that cause no harm). Pirelli has offered us no
reason to think that these three instances are representa-
tive of something broader, and its pleading betrays its
own timidity on that score. The complaint characterizes
the handful of transactions it identifies as “suspiciously
consistent” with the unlawful scheme alleged in the
qui tam case and the ESI suit. To satisfy the particularity
requirement of Rule 9(b) when it made allegations
based on information and belief, however, Pirelli
needed corroboration, not just consistency.
We do note, however, that both the district court and
Walgreens overstated the extent of Pirelli’s burden. In
order to survive the motion to dismiss phase, Pirelli
needed some firsthand information to provide grounds
to corroborate its suspicions. A preliminary look at data,
in theory, would have been an appropriate means of
No. 10-1686 21
accomplishing that task. Had the data showed an
unlikely pattern of reimbursements, it would have helped
make Pirelli’s claim plausible. Moreover, Walgreens
is incorrect inasmuch as it suggests that Pirelli neces-
sarily needed Illinois data to establish the existence of a
fraudulent scheme. See Corley v. Rosewood Care Ctr., 142
F.3d 1041, 1051 (7th Cir. 1998) (relaxed standard applies
when the information constituting the fraud is in the
hands of the defendant). Similarly, the district court was
incorrect when it suggested that Pirelli needs to point to
specific misrepresentations made by particular Wal-
greens staffers. Suppose Pirelli had enough reimburse-
ments nationwide to indicate that something was awry
but only limited reimbursements in any given jurisdic-
tion. If Pirelli knew that reimbursements of the drugs
skewed 75/25 in favor of the cheaper forms with non-
Walgreens pharmacies, but the proportions were flipped
with respect to Walgreens, it might have provided suffi-
cient grounds to corroborate Pirelli’s suspicion that
Walgreens was engaged in fraud and that Pirelli was
injured by the scheme. See Corley, 142 F.3d at 1050 (“the
particularity requirement of Rule 9(b) must be relaxed
where the plaintiff lacks access to all facts necessary to
detail his claim”). But those are not the allegations
here—and flexibility in the face of information asymme-
tries should not be conflated with whistling past the
rules of civil procedure.
As a proposed end run around the complaint’s par-
ticularity problems, Pirelli argues that Rule 9(b) does not
apply and that it should get the benefit of Rule 8 of the
Federal Rules of Civil Procedure. Rule 8, which governs
22 No. 10-1686
the allegations in most suits, substitutes particularity for
the lesser showing of “fair notice” of the nature of the
claim. Fed. R. Civ. P. 8(a)(2); Tamayo v. Blagojevich, 526 F.3d
1074, 1083 (7th Cir. 2008). The argument is that the
more forgiving pleading standards should apply
because Pirelli is entitled to recover under the ICFA’s
bar on unfair practices that fall short of deception.
815 ILCS 505/2 (banning unfair or deceptive acts); Robinson
v. Toyota Motor Credit Corp., 775 N.E.2d 951, 960-61
(Ill. 2002) (discussing factors that make a practice unfair
under the ICFA). When a claim alleges an unfair prac-
tice, the relaxed pleading standards of Rule 8 do indeed
govern. Windy City Metal Fabricators & Supply, Inc. v. CIT
Tech. Fin. Servs., Inc., 536 F.3d 663, 670 (7th Cir. 2008).
However, the practices alleged in Pirelli’s com-
plaint constitute fraudulent activity, and the dictates of
Rule 9(b) apply to allegations of fraud, not claims of
fraud. Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502,
507 (7th Cir. 2007) (“A claim that ‘sounds in fraud’—in
other words, one that is premised upon a course of fraud-
ulent conduct—can implicate Rule 9(b)’s heightened
pleading requirements.”). Here, the complaint alleges
that Walgreens unlawfully and intentionally concealed
from Pirelli’s PBM, or misrepresented to it, the form of
the drug that was prescribed and that Pirelli suffered
damages as a result. That is fraud predicated on either
a misrepresentation or an omission. See, e.g., United States
v. Stephens, 421 F.3d 503, 507 (7th Cir. 2005) (fraud em-
braces half-truths “that the defendant knows to be mis-
leading and which the defendant expects another to act
upon to his detriment and the defendant’s benefit”);
No. 10-1686 23
McClellan v. Cantrell, 217 F.3d 890, 893 (7th Cir. 2000) (fraud
includes misrepresentations, misleading omissions and
“embraces all the multifarious means which human
ingenuity can devise and which are resorted to by one
individual to gain advantage over another by false sug-
gestions or by the suppression of truth”). The district
court correctly concluded both that Rule 9(b) applied
and that its dictates were not satisfied.
In sum, Pirelli’s allegations were insufficient. Although
a plaintiff generally receives the benefit of reasonable
inferences at the motion to dismiss phase, e.g., Bonte v.
U.S. Bank, N.A., 624 F.3d 461, 463 (7th Cir. 2010), a plain-
tiff who bases allegations of fraud on information and
belief bears the burden of pleading plausible grounds
for suspecting that the defendant was engaged in a fraud-
ulent scheme. Pirelli did not shoulder that burden, and
its complaint was appropriately dismissed as a result.
B. Pirelli’s Unjust Enrichment Claim
One loose end remains. Pirelli argues that it has a
claim for unjust enrichment even if its fraud claim is not
viable. The district court dismissed the claim under
Federal Rule of Civil Procedure 12(b)(6), for failure to
state a claim upon which relief can be granted, concluding
that the dismissal of the fraud claim took the unjust
enrichment claim with it. We agree.
Under Illinois law, unjust enrichment is not a separate
cause of action. “Rather, it is a condition that may be
brought about by unlawful or improper conduct as
24 No. 10-1686
defined by law, such as fraud, duress, or undue in-
fluence, and may be redressed by a cause of action based
upon that improper conduct.” Alliance Acceptance Co. v.
Yale Ins. Agency, Inc., 648 N.E.2d 971, 977 (Ill. App. Ct. 1995)
(quoting Charles Hester Enters., Inc. v. Ill. Founders Ins. Co.,
484 N.E.2d 349, 354 (Ill. App. Ct. 1985)). For example, a
breach of a contract, or of a fiduciary duty, might create
a situation in which someone has retained a benefit that
ought to be disgorged based on principles of equity.
See also, e.g., HPI Health Care Servs., Inc. v. Mt. Vernon
Hosp., Inc., 545 N.E.2d 672, 679 (Ill. 1989) (citing 1 G.
Palmer, T HE L AW OF R ESTITUTION § 1.1, at 2-4 (1978), and
discussing one set of circumstances in which retaining
a benefit has been deemed unjust). Pirelli argues that
the conduct of which it has accused Walgreens violates
state law and therefore it should be able to maintain
its unjust enrichment claim. See Ass’n Benefit Servs., Inc. v.
Caremark RX, Inc., 493 F.3d 841, 855 (7th Cir. 2007) (“Illinois
courts have held that conduct rises to the level of
wrongful, in the context of an unjust enrichment claim,
when it violates the law.”).
But again, it is allegations of fraud, not claims of fraud,
to which Rule 9(b) applies. Pirelli’s complaint does not
contend merely that Walgreens erred in filling prescrip-
tions, violated the Illinois Pharmacy Act by doing so,
and should therefore be disgorged of erroneously
obtained benefits. Nor did Pirelli set out its unjust en-
richment claim in the alternative, pursuant to Federal
Rule of Civil Procedure 8(d)(2). See Holman v. Indiana,
211 F.3d 399, 407 (7th Cir. 2000) (“While [plaintiffs] need
not use particular words to plead in the alternative,
No. 10-1686 25
they must use a formulation from which it can be rea-
sonably inferred that this is what they were doing.”).
Rather, the complaint maintains that Walgreens was
engaged in a massive, perhaps fully-automated, system
of filling prescriptions for the more expensive forms of
Ranitidine and Fluoxetine. A system in which other
industry actors were deceived. We have found those
averments, bolstered by reimbursements to a single
member in Illinois for just one of the drugs at issue and
by a smattering of untethered nationwide data, insuf-
ficient to satisfy Pirelli’s information-and-belief
plausibility-burden.
In Caremark RX, we reaffirmed that “when the plain-
tiff’s particular theory of unjust enrichment is based on
alleged fraudulent dealings and we reject the plaintiff’s
claims that those dealings, indeed, were fraudulent, the
theory of unjust enrichment that the plaintiff has
pursued is no longer viable.” 493 F.3d at 855. Pirelli’s
response brief elides the complaint’s omission of alter-
native pleading, subtly reorienting its response brief
toward a more straightforward unjust enrichment claim
of a type that it might have pled in the alternative. The
effort founders, however, because of the axiomatic rule
that a plaintiff may not amend his complaint in his re-
sponse brief. Frederico v. Home Depot, 507 F.3d 188, 201-
02 (3d Cir. 2007) (citing Car Carriers, Inc. v. Ford Motor
Co., 745 F.2d 1101, 1107 (7th Cir. 1984)). Therefore, the
district court did not err by dismissing Pirelli’s unjust
enrichment claim.
26 No. 10-1686
III. Conclusion
For the reasons set forth above, the judgment of the
district court is A FFIRMED.
1-21-11