In re Insulin Pricing Litigation, 2021 WL 5980629, D. N.J., Dec. 17, 2021)
In summary, the court granted defendants’ Partial Motions to Dismiss State RICO Claims under the laws of Colorado, Georgia, Utah, and Wisconsin. Because the state racketeering claims were dismissed, Plaintiffs’ state-law civil conspiracy claims failed to the extent they are based on violations of state racketeering laws, with the exception of Plaintiffs’ civil conspiracy claim under Arizona law because it was based on violations of Arizona’s state racketeering law.
Plaintiffs are 80 individuals who filed the Third Amended Complaint on behalf of themselves and a proposed nationwide class of analog insulin consumers. Plaintiffs bring this action on behalf of themselves and all others similarly situated under Federal Rule of Civil Procedure 23(a) and 23(b)(3).
Plaintiffs defined their class as:
All individual persons in the United States and its territories who paid any portion of the purchase price for a prescription of Apidra, Basaglar, Fiasp, Humalog, Lantus, Levemir, Novolog, Tresiba, and/or Toujeo at a price calculated by reference to a list price, AWP (Average Wholesale Price), or WAC (Wholesale Acquisition Price) for purposes other than resale. Specifically, the class includes uninsured consumers, consumers in high-deductible health plans, consumers who reach the Medicare Part D donut hole, and consumers with high coinsurance rates. Defendants are pharmaceutical companies headquartered in the United States.
- Standing/Application of Indirect Purchaser Rule
Defendants argued that Plaintiffs, as indirect purchasers, lack standing to pursue the state racketeering claims. Defendants contend because the state racketeering statutes Plaintiffs invoke are modeled after the federal RICO statute, the indirect purchaser rule barring Plaintiffs’ federal RICO claims also bars the state racketeering claims. Id. Plaintiffs argue the indirect purchaser rule is a judicially-created federal rule that applies to federal RICO claims but not the state racketeering claims. Plaintiffs assert Defendants incorrectly “assume that the Third Circuit’s interpretation of the indirect purchaser rule to federal RICO claims should apply to these state racketeering claims.” Plaintiffs contend the Court “must interpret state law according to each state’s authority or otherwise predict how that state’s courts would interpret” the statute. (Id. at 6–7.)
As an initial matter, the Court is not aware of, nor have the parties identified, federal or state authority opining on the applicability of the indirect purchaser rule to the state racketeering statutes at issue. The Court begins with examining the relevant statutory language. In re Harvard Indus., Inc., 568 F.3d at 451. RICO’s civil action provision provides:
Any person injured in his business or property by reason of a violation of section 1962 of this chapter [18 U.S.C. § 1962] may sue therefor in any appropriate United States district court and shall recover threefold the damages he sustains and the cost of the suit, including a reasonable attorney’s fee ….
The court then compared this provision to the State laws and found the language in the civil action provisions of these state racketeering statutes is substantially similar to the language in the civil action provision of the federal RICO statute. Indeed, it is well-established the state racketeering statutes of Colorado, Georgia, Utah, and Wisconsin are modeled after the federal RICO statute. Thus, courts have looked to federal case law construing federal RICO for guidance in interpreting these state racketeering statutes.*7.
While the federal RICO statute does not explicitly state indirect purchasers lack standing, federal courts have construed the language of RICO’s civil action provision to bar indirect purchaser actions based on the anti-trust statute. Based on the Supreme Court’s message in Holmes, *8. And circuit law finding because RICO’s civil action provision was modeled on the Clayton Act, “antitrust standing principles apply equally to allegations of RICO violations.” *9.
The Court was led to predict the highest court in the state of Arizona would permit indirect purchaser actions to proceed under Arizona’s Civil Racketeering Statute. The court concluded that absent legislative intervention, the Court is led to predict the state’s highest court would continue to interpret its respective state racketeering statute consistent with its federal counterpart. Accordingly, the court granted Defendants’ Partial Motion to Dismiss as to the State RICO Claims under the laws of Colorado, Georgia, Utah, and Wisconsin (Counts Four, Six, Eight, and Nine), and denied as to the State RICO Claim under the laws of Arizona.
2. State Law Conspiracy
Defendants assert the state-law civil conspiracy claims fail without a viable underlying claim as a predicate for liability. Specifically, Defendants argue the state-law civil conspiracy claims fail to the extent they are based on violations of federal or state racketeering laws that have already been dismissed. Plaintiffs argue any surviving state racketeering or state consumer fraud claim can serve as viable underlying claim for their state-law civil conspiracy claims.
“The established rule is that a cause of action for civil conspiracy requires a separate underlying tort as a predicate for liability.” Id. at 13, citing cases that state that underlying tort that must be independently actionable against a single defendant.” Id. Plaintiffs cannot base their state-law civil conspiracy claims on underlying claims that “would not be actionable against an individual defendant.” Because the federal racketeering claims were dismissed, the state-law civil conspiracy claims fail to the extent they are based on violations of federal racketeering law. Similarly, because the state racketeering claims were dismissed, Plaintiffs’ state-law civil conspiracy claims fail to the extent they are based on violations of state racketeering laws, with the exception of Plaintiffs’ civil conspiracy claim under Arizona law is denied to the extent Plaintiffs base their civil conspiracy claim under Arizona law on violations of Arizona’s state racketeering law.
Accordingly, Defendants’ Partial Motion to Dismiss Plaintiffs’ state-law civil conspiracy claims was granted in part and denied in part.