Harden Manufacturing Corp. v. Pfizer, Inc.

United States Court of Appeals
For the First Circuit
No. 11-1806
IN RE: NEURONTIN MARKETING AND SALES PRACTICES LITIGATION
HARDEN MANUFACTURING CORPORATION, individually and on behalf of
itself and all others similarly situated; ASEA/AFSCME LOCAL 52
HEALTH BENEFITS TRUST; LOUISIANA HEALTH SERVICE INDEMNITY
COMPANY, d/b/a Blue Cross Blue Shield of Louisiana,
Plaintiffs, Appellants,
INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 68 WELFARE
FUND, on behalf of itself and all others similarly situated;
LORRAINE KOPA, on behalf of herself and all others similarly
situated; GERALD SMITH, on behalf of himself and all others
similarly situated; JEANNE RAMSEY, on behalf of herself and all
others similarly situated; CAROLYN HOLLAWAY, on behalf of herself
and all others similarly situated; GARY VARNAM, on behalf of
himself and all others similarly situated; JAN FRANK WITYK, on
behalf of herself and all others similarly situated,
Plaintiffs,
v.
PFIZER, INC.; WARNER-LAMBERT COMPANY LLC,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Patti B. Saris, U.S. District Judge]
Before
Lynch, Chief Judge,
Souter,* Associate Justice,
and Lipez, Circuit Judge.
Thomas M. Greene, with whom Michael Tabb, Ilyas J. Rona, Ryan
P. Morrison, and Greene LLP were on brief, for appellants.
John H. Beisner, with whom Mark S. Cheffo, Katherine A.
Armstrong, and Skadden, Arps, Slate, Meagher & Flom LLP were on
brief, for appellees.
April 3, 2013
*
Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
LYNCH, Chief Judge. This appeal by Harden Manufacturing
Corporation and others (together, "Harden plaintiffs") is one of
three that arose from multidistrict litigation ("MDL") concerning
the off-label marketing of Neurontin, an anticonvulsant drug
manufactured by Pfizer, Inc. Today we issue our decisions in
Kaiser Foundation Health Plan, Inc. v. Pfizer, Inc. (Kaiser), Nos.
11-1904, 11-2096 (1st Cir. ______, 2013), and Aetna, Inc. v.
Pfizer, Inc. (Aetna), No. 11-1595 (1st Cir. _____, 2013), which are
relevant to this appeal. We assume familiarity with both opinions,
which dispose of many of Pfizer's arguments, and limit our
discussion here to the issues particular to this appeal.
The Harden plaintiffs, representing a putative class of
third-party payors ("TPPs"), ask us to reverse both the district
court's grant of summary judgment to Pfizer and the court's denial
of class certification on the plaintiffs' claims under section 1962
of the Racketeer Influenced and Corrupt Organizations Act (RICO),
18 U.S.C. §§ 1961-1968, the New Jersey Consumer Fraud Act (NJCFA),
N.J. Stat. Ann. §§ 56:8-1 to 56:8-195, and state common law claims
of fraud and unjust enrichment. The core of the plaintiffs'
claims, as in Kaiser and Aetna, is the allegation that Pfizer
engaged in a fraudulent off-label marketing campaign that caused
the TPPs to pay for Neurontin prescriptions that were ineffective
for the off-label conditions at issue, and that the plaintiffs
suffered injury when they paid for those prescriptions. The
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details of these allegations are described in the district court's
opinion in In re Neurontin Mktg. & Sales Practices Litig. (Harden
II), 257 F.R.D. 315, 317-18 (D. Mass. 2009). The Harden
plaintiffs' appeal is limited to only the claims regarding the off-
label use of Neurontin for bipolar disorder, as to both the summary
judgment and the class certification issues.
The plaintiffs argue that the district court erred in
concluding that they failed to present a genuine issue of material
fact as to whether their injuries were caused by Pfizer's conduct.
They also argue that the district court abused its discretion in
denying class certification on the basis of a finding that
individual issues of causation and damages would predominate.
Based on the same reasoning we set forth in Kaiser and
Aetna, and applying the facts of record here, we reverse the grant
of summary judgment as to the plaintiffs' RICO claim. Based on the
record evidence, the Harden plaintiffs are not so differently
situated from Kaiser that they should be precluded from proving
their case to a jury. The district court considered the Harden
plaintiffs' failure to show any direct reliance on Pfizer's
misrepresentations in making decisions about their formularies,
together with the plaintiffs' use of aggregate evidence of
causation, to be inadequate to survive summary judgment. We
disagree. We also vacate the grant of summary judgment as to the
state law claims. In light of our decision regarding summary
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judgment, we vacate the denial of class certification and remand
for further proceedings consistent with this opinion.
I.
The putative class representatives in this appeal are
Harden Manufacturing Corporation, a self-insured employer;
ASEA/AFSCME Local 52 Health Benefits Trust, a public employee union
health benefits trust; and Louisiana Health Service Indemnity
Corporation, d/b/a Blue Cross Blue Shield of Louisiana, a nonprofit
health insurance provider.1 See In re Neurontin Mktg. & Sales
Practices Litig. (Harden III), 754 F. Supp. 2d 293, 307-08 (D.
Mass. 2010). The Harden plaintiffs are all TPPs; that is, they pay
for the costs of drugs prescribed for their members. They
currently seek to represent a nationwide class of TPPs who
reimbursed for Neurontin prescriptions for the off-label condition
of bipolar disorder between 1994 and 2004.
We review the record on summary judgment as it stood when
the district court ruled. Lewis v. City of Boston, 321 F.3d 207,
214 n.7 (1st Cir. 2003). In this case, the district court
completed the trial that formed the basis of the Kaiser appeal
before rendering summary judgment as to the Harden plaintiffs, and
the court relied on the facts adduced in that trial when granting
1
In the district court, the putative class representatives
also included International Union of Operating Engineers Local No.
68 Welfare Fund, another union health provider. This plaintiff has
voluntarily withdrawn from the appeal.
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summary judgment here.2 See Harden III, 754 F. Supp. 2d at 296.
Accordingly, in this decision we adopt the facts concerning
Pfizer's development and marketing of Neurontin as we explained
them in Kaiser, slip op. at 7-10, 16-17.
Harden filed its class action complaint against Pfizer3
in U.S. District Court in Massachusetts on May 14, 2004. On August
8, 2005, the present named plaintiffs moved to certify a nationwide
class under Fed. R. Civ. P. 23(a) and 23(b)(3). At that time, the
proposed class consisted of all TPPs that had purchased or
reimbursed for Neurontin for a number of off-label uses between
January 1, 1994 and December 31, 2004.4 In re Neurontin Mktg. &
Sales Practices Litig. (Harden I), 244 F.R.D. 89, 91-92 (D. Mass.
2007). The district court initially denied the motion without
prejudice on August 29, 2007, finding, inter alia, that the
commonality requirement was not met. Id. at 105, 115.
2
This situation stands in contrast to the state of the record
in Aetna, where the district court granted summary judgment on
Aetna's claims before proceeding with the Kaiser trial. See Aetna,
slip op. at 5.
3
Warner-Lambert Company, a subdivision of Pfizer, was also
named as a defendant. Warner-Lambert developed Neurontin in the
1980s and early 1990s before the company was acquired by Pfizer in
2000. In re Neurontin Mktg. & Sales Practices Litig. (Kaiser
Findings), No. 04–cv–10739-PBS, 2011 WL 3852254, at *5 (D. Mass.
Aug. 31, 2011).
4
The class certification motion also included a class of
individual patient-consumer plaintiffs. Since the consumers have
not appealed, we do not address their claims.
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Significantly, Pfizer had also argued in response to this
motion that class certification was inappropriate because the
Harden plaintiffs could not prove causation on a class-wide basis,
but rather would have to prove for each class member: (1) that its
physicians were personally exposed to off-label marketing that
contained false statements or material omissions, (2) that such
statements or omissions in the marketing materials caused those
doctors to issue the prescriptions, and (3) that the prescriptions
were ineffective for those doctors' patients. Id. at 109. At the
time the district court decided the motion, the plaintiffs had
commissioned, but had not yet received, an expert report from Dr.
Meredith Rosenthal, which the plaintiffs expected to use to prove
causation by aggregate data analysis.5 Id. at 109-110. While the
district court expressed some reservations about the Harden
plaintiffs' proposed method of proof, it did not make any
definitive rulings on causation due to the limited record. See id.
at 110-15.
On December 19, 2007, the Harden plaintiffs renewed their
motion for class certification. The district court denied the
motion on May 13, 2009. Harden II, 257 F.R.D. at 333. The court
found that the plaintiffs had overcome the commonality problem by
splitting the TPP class into multiple subclasses that were specific
5
Dr. Rosenthal's qualifications and the details of her
completed report are discussed in Kaiser, slip op. at 13-15.
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to the off-label indications for which Neurontin had been
prescribed, id. at 319, but that this time, the motion failed on
the basis of predominance, see id. at 317, 331-33. The court
concluded that the plaintiffs could not use statistical evidence to
establish class-wide causation in a consumer fraud claim under
either RICO or the NJCFA. See id. at 323-33. While Dr.
Rosenthal's regression analysis showed that "essentially all"
Neurontin prescriptions for bipolar disorder were the result of
Pfizer's off-label marketing, id. at 329, the court found that the
Rosenthal report nonetheless could not provide class-wide evidence
of causation because it did not take account of doctors' individual
prescribing decisions or the possibility that some of Pfizer's
off-label marketing might not have been fraudulent, see id. at
330-31. The court then reasoned that the TPPs could alternatively
show causation by evidence that they had directly relied on
Pfizer's misrepresentations in deciding how to treat Neurontin on
their formularies (the lists of drugs for which TPPs agree to
reimburse). See id. at 333. But because of the TPPs'
heterogeneity in their processes of constructing and managing their
formularies, id. at 332, such reliance could not be shown by proof
common to the class, id. at 333.
On May 28, 2009, the Harden plaintiffs moved for
reconsideration as to the bipolar subclass only. This motion would
not be resolved until after a series of other proceedings.
-8-
In March 2009, while the second class certification
motion was pending, Pfizer had moved for summary judgment on the
Harden plaintiffs' claims, as well as on the claims of the other
TPP plaintiffs in the MDL, including Kaiser and Aetna. Pfizer
argued, as relevant in this appeal, "that [p]laintiffs ha[d] failed
to create a triable issue of fact as to causation." In re
Neurontin Mktg. & Sales Practices Litig. (Neurontin Coordinated
SJ), 677 F. Supp. 2d 479, 485 (D. Mass. 2010). Similar to its
arguments in the class certification context, Pfizer argued that
Dr. Rosenthal's report was inadequate to raise a genuine issue of
fact as to causation because it could not distinguish which
prescriptions were actually influenced by the allegedly fraudulent
marketing campaign. Id. at 493-96. Without the Rosenthal report,
Pfizer argued, there was no evidence of causation, because the
individual doctors who had provided evidence had not stated that
they relied on any of Pfizer's alleged misrepresentations. Pfizer
also contended that the TPP plaintiffs had failed to show a
sufficiently direct relationship between Pfizer's alleged conduct
and the plaintiffs' alleged injuries to support a finding of
proximate causation, and that plaintiffs had failed to raise a
genuine issue of fact as to whether Neurontin was ineffective for
the off-label conditions at issue, which would preclude a finding
of compensable injury.
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The Harden plaintiffs responded that their statistical
and circumstantial evidence sufficed to create a triable issue of
fact as to causation because it demonstrated, as a general matter,
that Pfizer's marketing was what caused doctors to prescribe
Neurontin for off-label conditions, which led directly to the TPPs'
injury of having to pay for prescriptions that were ineffective.
See Harden III, 754 F. Supp. 2d at 310. They argued that it should
be for a jury to weigh individual doctors' stated reasons for
prescribing Neurontin against the Rosenthal report's data analysis
and the plaintiffs' other evidence of Pfizer's fraudulent marketing
campaign. Unlike in the Kaiser and Aetna cases, the Harden
plaintiffs did not claim that they had directly relied on any
misrepresentations by Pfizer in making decisions about whether to
include or restrict Neurontin on their formularies. Id. at 307-08,
311. They also argued that they had introduced "overwhelming"
evidence that Neurontin was ineffective for the off-label
conditions at issue.6
On January 8, 2010, the district court granted Pfizer's
summary judgment motion with respect to Aetna and denied it with
respect to Kaiser, holding that "in a misrepresentation action
involving fraudulent marketing of direct claims to doctors, a
6
Significantly, neither Pfizer's memoranda in support of
summary judgment nor the Harden plaintiffs' responses explicitly
addressed the elements of the plaintiffs' claims under the NJCFA or
state common law. The Harden plaintiffs cited only one case
construing NJCFA, in passing, in a footnote.
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plaintiff TPP or class must prove through individualized evidence
that the misrepresentation caused specific physicians, TPPs, or
consumers to rely on the fraud, and cannot rely on aggregate or
statistical proof." Neurontin Coordinated SJ, 677 F. Supp. 2d at
494. Kaiser's claims were allowed to continue to trial because
Kaiser had presented sufficient evidence that it had directly
relied on Pfizer's published materials in determining which
restrictions, if any, to place on Neurontin's formulary status.
See id. at 496-97.
The district court went on to hold a five-week trial, at
which a jury concluded that Pfizer had fraudulently marketed
Neurontin for four off-label conditions, including bipolar
disorder, and that this conduct had violated RICO. In re Neurontin
Mktg. & Sales Practices Litig. (Kaiser Findings), No. 04-cv-10739-
PBS, 2011 WL 3852254, at *1 (D. Mass. Aug. 31, 2011). The district
court reached the same conclusion in a bench trial on Kaiser's
state law claim. See id. at *60. During the Kaiser trial, the
district court accepted Dr. Rosenthal's report as evidence and
permitted Dr. Rosenthal to testify as an expert witness. Id. at
*32-33. That and other evidence of causation is described in our
Kaiser opinion. See Kaiser, slip op. at 12-19, 36-48. We affirmed
the jury's and district court's verdicts. See id., slip op. at 3.
On December 10, 2010, after the Kaiser trial had
concluded, the district court returned to Pfizer's summary judgment
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motion respecting the Harden plaintiffs, and it granted summary
judgment to Pfizer. Harden III, 754 F. Supp. 2d at 296, 311. The
court reiterated its finding from the earlier summary judgment
decision that the Rosenthal report alone could not support the
TPPs' causation argument, concluding that while the report
"demonstrates the likelihood of some injury, . . . it does not
suffice to demonstrate the extent of harm caused by the fraud, as
opposed to run-of-the-mill off-label detailing. Most courts have
rejected such aggregate proof." Id. at 310-11. Because the Harden
plaintiffs "ha[d] not directly relied on misrepresentations by
defendants,"7 and could not use the Rosenthal report to show
reliance by physicians, the court held that the Harden plaintiffs
had failed to present a triable issue of fact as to causation. Id.
at 311.
Then, on May 17, 2011, the district court addressed the
Harden plaintiffs' May 28, 2009 motion for reconsideration of the
denial of class certification as to the subclass of TPPs who had
paid for off-label prescriptions of Neurontin for bipolar
7
On December 20, 2010, one of the Harden plaintiffs -- Blue
Cross Blue Shield of Louisiana -- filed a motion to reconsider the
summary judgment ruling, asserting that it had shown direct
reliance on Pfizer's misrepresentations in the development of its
formulary. The district court denied this motion on April 20,
2011. None of the other Harden plaintiffs moved the court to
reconsider the summary judgment ruling on this basis, and none --
including Blue Cross Blue Shield of Louisiana -- challenge on
appeal the finding that they failed to show direct reliance.
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disorder.8 In re Neurontin Mktg. & Sales Practices Litig. (Harden
IV), No. 04-cv-10981-PBS, 2011 WL 1882870, at *1 (D. Mass. May 17,
2011). Relying on evidence adduced since the prior class
certification denial, including evidence presented at the Kaiser
trial, the district court determined that "[p]laintiffs have proved
that it is more likely than not likely [sic] that they were harmed
by Pfizer's conduct because many doctors would not have prescribed
Neurontin for bipolar disorder if they had known there was no
reliable scientific evidence supporting its use." Id. at *5.
However, the court went on to find that the Rosenthal report still
did not satisfy the predominance requirement as to causation or
damages. Id. at *4-5. It held that, "in order to differentiate
those prescriptions that were caused by fraud from those that were
attributable to non-fraudulent off-label marketing or other
independent factors, a factfinder would have to perform a granular
doctor-by-doctor analysis." Id. at *5. Such an inquiry would be
unmanageable in a class action litigation. Id. Moreover, "complex
issues related to calculating damages" would also make the class
unmanageable, and thus the Harden plaintiffs had failed to satisfy
Fed. R. Civ. P. 23(b)(3)'s superiority requirement. Id. at *6.
8
Pfizer argued that this motion was moot as a result of the
December 2010 summary judgment decision, but the district court did
not rule on this argument. In re Neurontin Mktg. & Sales Practices
Litig. (Harden IV), No. 04-cv-10981-PBS, 2011 WL 1882870, at *1 (D.
Mass. May 17, 2011).
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On June 28, 2011, the district court entered a separate
judgment in favor of Pfizer on all of the Harden plaintiffs'
claims, and the plaintiffs filed a timely appeal on July 7, 2011.
II.
On appeal, the Harden plaintiffs argue that the district
court erred in concluding that they did not raise a triable issue
of fact as to but-for or proximate causation. We review a grant of
summary judgment de novo, drawing all reasonable inferences in
favor of the non-moving party. Podiatrist Ass'n, Inc. v. La Cruz
Azul de P.R., Inc., 332 F.3d 6, 13 (1st Cir. 2003). We will
reverse a grant of summary judgment if we find that the nonmovant
has "established a genuine issue of material fact that a reasonable
jury could resolve in [its] favor." Collins v. Univ. of N.H., 664
F.3d 8, 19 (1st Cir. 2011) (emphasis omitted) (quoting Coffin v.
Bowater, Inc., 501 F.3d 80, 97 (1st Cir.2007)) (internal quotation
mark omitted).
A. RICO Proximate Causation
The district court found that the Harden plaintiffs had
presented adequate evidence that Pfizer fraudulently promoted
Neurontin for off-label treatment of bipolar disorder; that this
conduct likely caused harm to the plaintiffs; and that such harm
would be the expected consequence of Pfizer's conduct. See Harden
IV, 2011 WL 1882870, at *5; Harden III, 754 F. Supp. 2d at 310;
Harden I, 244 F.R.D. at 111. Based on these findings, the Harden
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plaintiffs argue, the court should have determined that the
plaintiffs survived summary judgment on the proximate causation
issue. Pfizer responds that the causal chain here is too
attenuated to establish proximate cause because it is based on the
individual prescribing decisions of thousands of physicians who
exercise independent medical judgment.
As we explained in Kaiser, slip op. at 23, our RICO
analysis is controlled by the Supreme Court's decisions in Holmes
v. Securities Investor Protection Corp., 503 U.S. 258 (1992), and
its progeny. See Anza v. Ideal Steel Supply Corp., 547 U.S. 451
(2006); Bridge v. Phoenix Bond & Indem. Co., 128 S. Ct. 2131
(2008); Hemi Grp., LLC v. City of New York, 130 S. Ct. 983 (2010).
The proximate causation question in this appeal is essentially
identical to the question presented in Kaiser's appeal, and we
decide here, as we did there, that the causal chain is sufficiently
direct to survive the Court's test at the summary judgment stage.
First, the Harden plaintiffs need not have demonstrated
that they directly relied on Pfizer's misrepresentations in order
to survive summary judgment. The Supreme Court has held that
direct reliance is not an element of proximate cause in a civil
RICO cause of action based on mail fraud, as the plaintiffs' case
is here. See Bridge, 128 S. Ct. at 2134. It is true that Kaiser,
unlike the Harden plaintiffs, presented evidence that it had
directly relied on Pfizer's misrepresentations in the course of
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managing its formulary, but that evidence, while helpful in
Kaiser's presentation to the jury, was not essential to Kaiser's
ability to prove proximate cause. See Kaiser, slip op. at 30,32-
36. The absence of direct reliance evidence in this case does not
mean that the Harden plaintiffs' remaining evidence of causation
was insufficient, as a matter of law or fact, to reach a jury.
RICO's proximate cause inquiry includes both the question
of whether there is "some direct relation between the injury
asserted and the injurious conduct alleged," Holmes, 503 U.S. at
268, and the consideration of three functional factors that reflect
concerns of justice and administrability, id. at 269-70. Here, a
reasonable jury could have found that the injury to the Harden
plaintiffs was direct because the plaintiffs have adduced evidence
that they were "the primary and intended victims of [Pfizer's]
scheme to defraud." Bridge, 128 S. Ct. at 2139. The causal chain
in this case is not so attenuated as to support summary judgment
for Pfizer because, as we explained in Kaiser, Pfizer knew that the
structure of the American health care system meant that almost all
off-label Neurontin prescriptions written by physicians would be
paid for by TPPs. See Kaiser, slip op. at 34. The Harden
plaintiffs' evidence showed that Pfizer's marketing strategy
specifically aimed to increase Neurontin's market share in
prescriptions for bipolar disorder -- prescriptions for which TPPs
would pay. See Harden IV, 2011 WL 1882870, at *5 (finding that
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Pfizer "engage[d] in a nationwide fraudulent marketing campaign"
aimed at increasing the number of Neurontin prescriptions for
bipolar disorder even though "there [was] no reliable scientific
evidence to support the use of Neurontin to treat bipolar
disorder"). Under these circumstances, drawing all reasonable
inferences in the plaintiffs' favor, a factfinder could conclude
that the Harden plaintiffs' injury was a "foreseeable and natural
consequence" of Pfizer's scheme. Bridge, 128 S. Ct. at 2144; see
BCS Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750, 758 (7th Cir.
2011) ("Once a plaintiff presents evidence that he suffered the
sort of injury that would be the expected consequence of the
defendant's wrongful conduct, he has done enough to withstand
summary judgment on the ground of absence of causation.").
Pfizer argues that because doctors exercise independent
medical judgment in making decisions about prescriptions, the
actions of these doctors break the causal chain. But as we held in
Kaiser, slip op. at 35, the fact that some physicians may have
considered factors other than Pfizer's detailing materials does not
add such attenuation to the causal chain as to eliminate proximate
cause. Rather, this argument presents a question of proof, to be
resolved at trial, regarding the total number of prescriptions (if
any) that were attributable to Pfizer's actions.
As to the functional factors in the proximate cause
analysis, see Holmes, 503 U.S. at 269-70, Pfizer likewise has not
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shown that there are no genuine issues of material fact. The
plaintiffs presented evidence at the summary judgment stage that
they would be able to calculate damages attributable to Pfizer's
conduct.9 See Holmes, 503 U.S. at 269. While the parties dispute
whether there is any risk of duplicative recovery and whether the
Harden plaintiffs are in the best position to bring suit, see id.
at 269-70, the Harden plaintiffs' evidence that they were among the
primary victims of Pfizer's scheme is enough to raise triable
issues on these questions.
B. RICO But-For Causation
The Harden plaintiffs argue that the district court erred
in requiring them to provide doctor-by-doctor evidence of reliance
in order to survive summary judgment on but-for causation. The
but-for causation question here, as in Kaiser, is whether Pfizer's
allegedly fraudulent marketing campaign caused the plaintiffs to
pay for more Neurontin prescriptions for bipolar disorder than they
otherwise would have paid for. The Harden plaintiffs maintain that
the Rosenthal report, along with other circumstantial evidence,
provided strong, admissible evidence of but-for causation, and once
the plaintiffs made that showing, any burden of demonstrating that
physicians actually prescribed Neurontin for non-fraudulent reasons
9
The class plaintiffs submitted the report of damages expert
Dr. Raymond Hartman. As with Dr. Rosenthal's report, the district
court accepted Dr. Hartman's report as evidence of damages in the
Kaiser trial. See Kaiser, slip op. at 19-20, 22.
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-- i.e., that a superseding cause interrupted the chain of
causation -- fell upon Pfizer. Pfizer argues that physicians'
decisions to prescribe Neurontin are not "superseding causes," but
essential links in the Harden plaintiffs' chain of causation, and
that the individualized nature of physicians' prescribing decisions
renders aggregate proof inappropriate.
These arguments again track the same ground we covered in
Kaiser. We conclude here, as we did there, that the Rosenthal
report is capable of providing proof of but-for causation.10 The
Harden plaintiffs need not prove causation through the testimony of
individual doctors. The combination of the aggregate evidence and
the circumstantial evidence was enough for the Harden plaintiffs to
overcome summary judgment.
As we explained in Kaiser, slip op. at 49-50, Pfizer's
argument misapprehends the nature of the but-for causation inquiry.
A tort plaintiff need not "prove a series of negatives; he doesn't
have to 'offer evidence which positively exclude[s] every other
possible cause of the accident.'" BCS Servs., 637 F.3d at 757
(alteration in original) (quoting Carlson v. Chisholm-Moore Hoist
10
In Kaiser, slip op. at 40-48, we analyzed the admissibility
of Dr. Rosenthal's report and testimony under Fed. R. Evid. 702 and
Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).
Pfizer will, of course, have an opportunity to argue against its
admissibility at the trial of the Harden plaintiffs' claims, if
Pfizer has objections specific to this case. However, at this
stage of the litigation, we adopt our conclusions from Kaiser in
determining that the Harden plaintiffs could rely on the report to
defend against summary judgment.
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Corp., 281 F.2d 766, 770 (2d Cir. 1960) (Friendly, J.)). "Once a
plaintiff presents evidence that he suffered the sort of injury
that would be the expected consequence of the defendant's wrongful
conduct," the burden shifts to the defendant to rebut this causal
inference. Id. at 758.
Although Pfizer presented testimony from doctors who
stated that they prescribed Neurontin for off-label uses without
relying on Pfizer's misrepresentations, the existence of these
individual doctors does not defeat the implication -- clearly
presented through Dr. Rosenthal's regression analysis -- that
Pfizer's misinformation had a significant influence on thousands of
other prescribing decisions. And in addition to the aggregate
statistical evidence, the Harden plaintiffs also presented
circumstantial evidence that supported an inference of causation.
For instance, the plaintiffs offered documents showing that
psychiatrists had almost never prescribed Neurontin for bipolar
disorder until after Pfizer began its marketing campaign, at which
point prescriptions jumped by 1700% in two years. Ultimately, it
is a jury's task to weigh the individual testimony presented by
Pfizer against the aggregate and circumstantial evidence presented
by the Harden plaintiffs.
More generally, Pfizer argues that the Harden plaintiffs'
use of the Rosenthal report to show but-for causation was precluded
by the decisions of other courts in pharmaceutical marketing RICO
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fraud cases. We reject these arguments here for the same reasons
we did in Kaiser. First, regression analysis is a widely accepted
method of showing causation under several causes of action, and we
see no reason to reach a different conclusion for a specific subset
of RICO claims based on fraudulent pharmaceutical marketing. See
Kaiser, slip op. at 41-43. Second, the other pharmaceutical RICO
cases are largely inapposite to a case such as this, especially
where the plaintiffs allege a "quantity effect" rather than an
"excess price" theory.11 See id. at 50-53; compare UFCW Local 1776
v. Eli Lilly & Co., 620 F.3d 121, 133-36 (2d Cir. 2010). To the
extent that some district courts in other circuits may have
endorsed Pfizer's position that aggregate evidence is legally
insufficient to prove but-for causation, we disagree, at least on
the facts of this case.
C. RICO Injury
Finally, Pfizer argues that the Harden plaintiffs did not
show that Neurontin was always ineffective for all bipolar
patients, and hence cannot show that they suffered any injury.
Although the district court did not decide Pfizer's motion for
summary judgment on this basis, Pfizer urges it as an alternate
11
In the RICO pharmaceutical marketing context, a "quantity
effect" theory is an allegation that a defendant's fraud caused a
plaintiff to pay for more prescriptions than it would have absent
the fraud, whereas an "excess price" theory is an allegation that
the defendant's fraud caused the plaintiff to pay more for the drug
than it was worth. See UFCW Local 1776 v. Eli Lilly & Co., 620
F.3d 121, 129 (2d Cir. 2010).
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ground for affirmance. See Hoyos v. Telecorp Commc'ns, Inc., 488
F.3d 1, 5 (1st Cir. 2007) (appellate court may affirm summary
judgment on any basis apparent in the record).
For the reasons stated in Kaiser, we reject Pfizer's
position that these plaintiffs must prove the individual,
subjective ineffectiveness of each off-label prescription in order
to establish injury. See Kaiser, slip op. at 55-58. Given that
conclusion, Pfizer's argument is premature. The Harden plaintiffs
have proffered clinical trial evidence that Neurontin is
ineffective for bipolar disorder, which is certainly enough to
raise a genuine issue of fact on the effectiveness issue. The
question of whether the Harden plaintiffs suffered injury is for
the jury.
D. State Law Claims
The Harden plaintiffs' complaint included a claim under
the NJCFA as well as state common law claims for fraud and unjust
enrichment. Pfizer's summary judgment motion did not specifically
argue that the plaintiffs had failed to raise a triable issue of
fact as to their state law claims, and the plaintiffs' opposition
to Pfizer's motion likewise did not argue that they had overcome
the summary judgment hurdle on those claims. The district court
granted summary judgment to Pfizer on the state law claims without
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separate discussion.12 See Harden III, 754 F. Supp. 2d at 311. In
their opening brief to this court, the Harden plaintiffs did not
explicitly argue that the district court erred in granting summary
judgment on the state law claims, although they argued that the
court erred in denying class certification on those claims. In
response, Pfizer argued for the first time that the state claims
failed as a matter of law, under a number of theories.
Under these circumstances -- where both the district
court record and the briefing before us is substantially incomplete
on the state law issues -- we believe the best course of action is
to vacate the district court's grant of summary judgment on the
Harden plaintiffs' NJCFA and state common law claims. We remand so
that the district court may decide any questions of state law in
the first instance.
III.
The Harden plaintiffs also appeal the district court's
denial of class certification, arguing that the district court
erred in concluding that (1) common evidence could not demonstrate
causation and damages, and (2) a class action was not the superior
method of adjudication. This court reviews denials of class
12
The district court had earlier denied class certification
on the NJCFA claim on the basis that, under New Jersey law, the
plaintiffs could not rely on aggregate evidence to prove class-wide
causation, see Harden II, 257 F.R.D. at 332, but the court did not
address this issue on summary judgment, see generally Harden III,
754 F. Supp. 2d 293.
-23-
certification for abuse of discretion. Waste Mgmt. Holdings, Inc.
v. Mowbray, 208 F.3d 288, 295 (1st Cir. 2000). An abuse of
discretion may occur "when a court . . . relies upon an improper
factor, omits consideration of a factor entitled to substantial
weight, . . . mulls the correct mix of factors but makes a clear
error of judgment in assaying them[,] . . .[or] adopts an incorrect
legal rule." Id. (citation omitted).
Importantly, the district court's decisions on class
certification cover very similar issues as those involved in the
summary judgment decision. In particular, the district court's
denials of the Harden plaintiffs' second motion for class
certification and motion for reconsideration pivoted on the
determination that the Rosenthal report could not provide proof of
causation or damages. See Harden IV, 2011 WL 1882870, at *4;
Harden II, 257 F.R.D. at 331-32. This conclusion is what led the
court to decide that a class action would be "unmanageable" due to
the requirement of a "granular doctor-by-doctor analysis." Harden
IV, 2011 WL 1882870, at *5. The legal requirements to establish
proximate and but-for causation under RICO were key factors across
both the summary judgment and class certification decisions, and in
both instances the district court relied on many of the same
decisions from other circuits that we have found to be inapposite
for the case at hand.
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In light of our holdings in Kaiser regarding RICO
causation principles, we vacate the district court's denial of
class certification13 and remand for further proceedings. We
express no view as to whether the plaintiffs can, on remand, meet
the requirements of Rule 23.
IV.
The district court's grant of summary judgment in favor
of Pfizer is reversed as to the Harden plaintiffs' RICO claims and
vacated as to their NJCFA and state common law claims. The
district court's denials of the Harden plaintiffs' renewed motion
for class certification and motion for reconsideration are vacated,
and the case is remanded for further proceedings consistent with
this opinion. So ordered.
13
Because we reverse the district court's grant of summary
judgment on the RICO claim and vacate summary judgment on the state
law claims, we need not consider whether, as Pfizer has alleged,
the summary judgment decision mooted the plaintiffs' motion for
reconsideration. See Harden IV, 2011 WL 1882870, at *1.
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