In re Genentech, Herceptin Trastuzumab Mktg. & Sales Practices Litig.

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IN RE GENENTECH, INC., HERCEPTIN TRASTUZUMAB MARKETING AND SALES PRACTICES LITIGATION

No. 16-MD-02700-GKF-JFJ

United States District Court, N.D. Oklahoma

June 14, 2024

OPINION AND ORDER

GREGORY K. FRIZZELL, UNITED STATES DISTRICT JUDGE

This matter comes before the court on plaintiffs' Motion for Leave to Amend Master Complaint [Doc. 698]. For the reasons set forth below, the motion is granted.

I Background/Procedural History

On November 12, 2020, plaintiffs filed the Master Complaint, which included the following claims: (1) fraud; (2) breach of express warranty; (3) breach of implied warranty; (4) California False Advertising and Unfair Competition Violations pursuant to Cal. Bus. & Pro. Code §§ 17500 et seq. and 17200 et seq.; and (5) unjust enrichment.

On December 3, 2020, Genentech filed a motion to dismiss the Master Complaint. Therein, Genentech argued, in part, that, pursuant to the reasoning of Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020), plaintiffs' equitable claims for unjust enrichment and violations of California's unfair competition and false advertising laws should be dismissed because plaintiffs have an adequate legal remedy.

In a May 16, 2022 Opinion and Order, U.S. District Judge Terence C. Kern denied Genentech's motion to dismiss the Master Complaint. In the Opinion and Order, Judge Kern did not explicitly address Genentech's argument regarding plaintiffs' equitable claims.

On June 29, 2023, the MDL was reassigned to the undersigned.

On February 16, 2024, pursuant to Sonner and the subsequently-decided Guzman v. Polaris Industries, Inc., 49 F.4th 1308 (9th Cir. 2022), Genentech filed a motion for partial judgment on the pleadings as to Count IV - California False Advertising and Unfair Competition Violations and Count V - Unjust Enrichment, but only to the extent premised on California law. Genentech again argued that the equitable claims fail based on the existence of an adequate legal remedy.

On April 17, 2024, the court granted the motion as to Count IV - California False Advertising and Unfair Competition Violations, but denied the motion as to Count V - Unjust Enrichment to the extent premised on California law. That same day, the court entered the Second Amended Phase II Scheduling Order.

A month later, on Friday, May 17, 2024, the court held a Case Management Conference. During the conference, plaintiffs expressed their intent to file a motion for leave to amend the Master Complaint to explicitly plead the California False Advertising and Unfair Competition Violations claim in the alternative and to explain why their legal claims and remedies are inadequate. Genentech stated it would object to such a motion.

Although the court indicated at the conference it would not permit plaintiffs to file a motion to amend, in a Monday, May 20, 2024 Order, the court reconsidered its position. Additionally, the court struck the remaining deadlines in the Second Amended Phase II Scheduling Order, to be reset upon the court's resolution of plaintiffs' motion.

On May 24, 2024, plaintiffs filed the Motion for Leave to Amend Master Complaint. [Doc. 698]. Genentech responded in opposition [Doc. 700], and plaintiffs filed a reply brief. [Doc. 702].

II. Standard

Federal Rule of Civil Procedure 15(a) permits a party to amend its pleading once as a matter of course within twenty-one (21) days of service or, if the pleading is one to which a responsive pleading is required, within 21 days of service of the responsive pleading or motion. Fed.R.Civ.P. 15(a)(1). “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave.” Fed.R.Civ.P. 15(a)(2).

Leave to amend should be freely given “when justice so requires.” Fed.R.Civ.P. 15(a)(2). The court should “generally refuse leave to amend only on ‘a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.'” Duncan v. Manager, Denver Dep't of Safety, 397 F.3d 1300, 1315 (10th Cir. 2005). “If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits.” Minter v. Prime Equip. Co., 451 F.3d 1196, 1204 (10th Cir. 2006) (alteration in original) (quoting Foman v. Davis, 371 U.S. 178, 182 (1962)). “[T]he grant of leave to amend the pleadings pursuant to Rule 15(a) is within the discretion of the trial court.” Minter, 451 F.3d at 1204 (quoting Zenith Radio Corp. v. Hazeltine Rsch., Inc., 401 U.S. 321, 330 (1971)).

III. Analysis

Plaintiffs seek leave to cure the deficiencies noted in the court's May 20, 2024 Order with respect to the California False Advertising (FAL) and Unfair Competition Violations (UCL) claim. Genentech contends that leave to amend should be denied because the requested amendment is (1) futile pursuant to Sonner and Guzman, and (2) untimely and prejudicial. The court separately considers each argument.

A. Futility

Genentech argues that the claim is futile because “federal courts are divested of equitable jurisdiction when the operative complaint demonstrates the potential for an adequate legal recovery in the form of damages, not if and when plaintiffs ultimately succeed in obtaining an adequate legal recovery.” [Doc. 700, p. 5]. However, in the May 20, 2024 Order, the court declined to interpret Sinner and Guzman to wholly prohibit pleading in the alternative. Rather, the undersigned construed Sonner and Guzman to require that plaintiffs assert lack of an adequate remedy at law in order to plausibly allege a claim for equitable relief under the UCL and FAL. [Doc. 692, p. 8]. The court's interpretation is consistent with Tenth Circuit precedent, which permits a party to plead both legal and equitable claims, regardless of consistency. See Blazer v. Black, 196 F.2d 139, 144 (10th Cir. 1952); Boulware v. Baldwin, 545 Fed.Appx. 725, 729 (10th Cir. 2013) (“Federal pleading rules have for a long time permitted the pursuit of alternative and inconsistent claims.”); Haynes Trane Serv. Agency, Inc. v. Am. Standard, Inc., 51 Fed.Appx. 786 (10th Cir. 2002); see also Fed.R.Civ.P. 8(d)(3) (“A party may state as many separate claims or defenses as it has, regardless of consistency.”). Insofar as Genentech's response suggests the court should reconsider its prior Order, the court declines to revisit the issue.

Thus, the court need only determine whether plaintiffs have plausibly alleged a lack of an adequate legal remedy in the proposed Amended Master Complaint. The U.S. Supreme Court has recognized that “[a] remedy at law does not exclude one in equity unless it is equally prompt and certain and in other ways efficient.” Am. Life Ins. Co. v. Stewart, 300 U.S. 203, 214 (1937).

In the proposed Amended Master Complaint, plaintiffs explicitly plead the UCL and FAL claim in the alternative. [Doc. 698-1, p. 29, ¶ 167]. Additionally, plaintiffs assert that “no adequate remedy at law exists to recover the amounts paid for Herceptin 440 mg to the extent those amounts (in whole or in part) are deemed not recoverable as damages under their claims for fraud, breach of express warranty, and breach of implied warranty.” [Id. at p. 31, ¶ 181]. Plaintiffs further allege:

Restitution or disgorgement may also be more certain, prompt, and efficient than other legal remedies requested herein. The scope of actionable misconduct under the FAL and UCL is broader than under the other causes of action asserted herein. For example, Plaintiffs can prevail on their UCL claim, under the “unlawful” prong by showing only that Genentech failed to comply with state and/or federal laws and/or regulations. They may also prevail on their UCL claim under the “unfair” prong merely by proving Genentech acted unscrupulously or engaged in conduct that substantially injured Herceptin purchasers. In addition, unlike a claim for common law fraud, the FAL and UCL do not require proof that the Herceptin label claim was false. Instead, Plaintiffs may recover restitution or disgorgement only by showing the label claim was misleading.

[Id. at p. 32, ¶ 182].

Genentech first argues that the foregoing allegations do not plausibly assert that plaintiffs lack an adequate legal remedy because the legal claims and equitable claims seek the same measure of relief-specifically, the amounts paid for 440 mg Herceptin vials. [Doc. 700, pp. 6-7]. However, as previously stated, the Tenth Circuit permits pleading alternative claims, provided that plaintiffs do not receive a double recovery. See Boulware, 545 Fed.Appx. at 729; see also Mason v. Okla. Tpk. Auth., 115 F.3d 1442, 1459 (10th Cir. 1997), overruled on other grounds, TW Telecom Holdings, Inc. v. Carolina Internet Ltd., 661 F.3d 495 (10th Cir. 2011) (emphasis added) (quoting Clappier v. Flynn, 605 F.2d 519, 530 (10th Cir. 1997) (“It is well established that ‘double recovery is precluded when alternative theories seeking the same relief are pled and tried together.'”). Thus, plaintiffs may plead the UAL and FAL claim in the alternative while they attempt to prove their other, legal claims, but plaintiffs will not be permitted to doubly recover.^[1]

Genentech also argues that plaintiffs' allegations that restitution or disgorgement are “more certain, prompt, and efficient” because the equitable claims may be easier to prove than their legal claims are insufficient. Genentech directs the court to no Tenth Circuit authority for the proposition. Instead, Genentech relies on unpublished and district court decisions interpreting Sonner and Guzman, almost all of which are from federal courts sitting in California.

However as previously...