Yachera v. Westminster Pharm., LLC

477 F.Supp.3d 1251

Kim YACHERA and Julie Shafer, on behalf of themselves and all others similarly situated, Plaintiffs,

v.WESTMINSTER PHARMACEUTICALS, LLC, Defendant.

Case No. 8:18-cv-2463-MSS-AAS

United States District Court, M.D. Florida, Tampa Division.

Signed June 15, 2020

Andrew Obergfell, Pro Hac Vice, Bursor & Fisher, PA, New York, NY, Neal J. Deckant, Pro Hac Vice, Bursor & Fisher, PA, Walnut Creek, CA, Scott A. Bursor, Bursor & Fisher, PA, Miami, FL, for Plaintiffs.

David D. Yeagley, Pro Hac Vice, Ulmer & Berne LLP, Cleveland, OH, Megan B. Collins, Paul M. Weekley, Weekley Schulte Valdes LLC, Tampa, FL, for Defendant.

ORDER

MARY S. SCRIVEN, UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court for consideration of Defendant's Motion to Dismiss Plaintiffs’ First Amended Complaint, (Dkt. 41), Plaintiffs’ response in opposition thereto, (Dkt. 49), Defendant's reply in support of the Motion, (Dkt. 54), and the Parties’ supplemental briefs regarding Debernardis v. IQ Formulations, LLC, 942 F.3d 1076 (11th Cir. 2019). (Dkts. 58, 59) Upon consideration of all relevant filings, case law, and being otherwise fully advised, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion to Dismiss Plaintiffs’ First Amended Complaint.

I. BACKGROUND

A. Allegations of the Amended Complaint

This putative class action arises from Westminster Pharmaceuticals, LLC's production and distribution of generic prescription thyroid tablets. (Dkt. 31 at ¶ 3) Plaintiffs allege that the tablets—designed for the treatment of hypothyroidism—contained active pharmaceutical ingredients ("API") sourced from Sichuan Friendly Pharmaceutical Co., a China-based supplier. (Id. at ¶¶ 3-4 7-8) As a result of Sichuan's deviations from "current good manufacturing practice," the thyroid tablets Plaintiffs purchased and consumed were adulterated, meaning that they "did not contain the amount of active ingredients stated on the label." (Id. at ¶¶ 3-5) Plaintiffs claim that the inconsistency between the dosages stated on the labels and the actual amount of API in the thyroid tablets (i) "exposed [them] to an immediate risk of harm" and (ii) rendered the tablets "worthless and unfit for their intended purpose." (Id. at ¶¶ 29, 32-33)

i. The FDA Inspects Sichuan's Facilities and Issues an Import Alert on Sichuan's Products

In October 2017, the U.S. Food and Drug Administration ("FDA") inspected Sichuan's facilities in China. (Id. at ¶ 9) The inspection revealed "significant deviations from current good manufacturing practice." (Id. at ¶ 17) Among other things, the FDA found that Sichuan failed to (i) "conduct residual solvent testing of its [API]," (ii) "adequately validate written procedures for the cleaning and maintenance of equipment," and (iii) "exercise sufficient controls over computerized systems to prevent unauthorized access or changes to data, and to have adequate controls to prevent omission of data." (Id. at ¶¶ 18-21) These findings led the FDA in March 2018 to place an Import Alert on all of Sichuan's drug-related products. (Id. at ¶ 10) The Import Alert meant that the FDA could seize Sichuan's products at ports of entry without physically examining them. (Id. at ¶ 12)

Even though Westminster incorporated Sichuan-produced API into its thyroid tablets, it did not immediately recall the tablets after the March 2018 Import Alert. (Id. at ¶ 13) Nor did it issue an immediate recall after the FDA sent Sichuan a warning letter in June 2018, summarizing the poor manufacturing practices that led to the Import Alert. (Id. at ¶¶ 14-15)

ii. Westminster Voluntarily Recalls the Thyroid Tablets, and the FDA Tests Sichuan-Manufactured API

In August 2018—over four months after the Import Alert—Westminster voluntarily recalled its thyroid tablets. (Id. at ¶ 16) The recall notice explained that the tablets "were manufactured using [API] that were sourced prior to the FDA's Import Alert of Sichuan Friendly Pharmaceutical Co., Ltd., which as a result of a 2017 inspection were found to have deficiencies with Current Good Manufacturing Practices." (Id. ) According to the recall notice, these deficiencies "could represent the possibility of risk being introduced into the manufacturing process." (Id. )

Approximately one week after the recall, the FDA announced that laboratory testing had confirmed that Sichuan's "porcine thyroid API" contained "inconsistent levels of the active ingredients" and "should not be used to manufacture or compound drugs for patient use." (Id. at ¶ 25) The FDA specifically "recommend[ed] patients not use porcine thyroid drug products made by Westminster" because "[t]hese products were made using API from Sichuan." FDA Alerts Drug Makers of a Recall of Porcine Thyroid API from Sichuan Friendly Pharmaceutical Co., Limited, China , U.S. FOOD & DRUG ADMINISTRATION , https://www.fda.gov/drugs/drug-safety-and-availability/fda-alerts-drug-makers-recall-porcine-thyroid-api-sichuan-friendly-pharmaceutical-co-limited-china (last visited June 15, 2020). The FDA also explained that "over or under treatment of hypothyroidism could result in permanent or life-threatening adverse health consequences." (Dkt. 31 at ¶ 25)

iii. The Named Plaintiffs

Plaintiff Kim Yachera is a Pennsylvania citizen who purchased Westminster-produced thyroid tablets from CVS. (Id. at ¶ 32) Although she was prescribed a 15 mg dosage, she alleges that "the dosage stated on the label was false, as the medications did not contain the amount of API stated." (Id. ) Yachera learned about the recall when she received an August 2018 letter from CVS informing her that Westminster was recalling the thyroid tablets "because of potential quality concerns during the manufacturing of the [API]." (Id. ) The letter also instructed Yachera to stop using the tablets, which "may represent a potential health hazard or safety risk." (Id. )

Plaintiff Julie Shafer is a Michigan citizen who purchased Westminster-produced thyroid tablets from Walgreens. (Id. at ¶ 33) Like Yachera, she alleges that the tablets she purchased did not contain her prescribed dosage of 120 mg. (Id. ) Shafer learned about the recall from an August 2018 letter stating that her medication was "being recalled due to risk of impurity from substandard manufacturing practices." (Id. ) The letter instructed her to "contact her pharmacy for a replacement medication." (Id. )

Plaintiffs allege that their consumption of the adulterated tablets "exposed [them] to an immediate risk of harm." (Id. at ¶¶ 32-33) Plaintiffs also allege that, when they purchased the tablets, they "reviewed the accompanying labels and disclosures, including the dosage listed on the label, and understood them as representations and warranties by the manufacturer ... that the medications were properly manufactured and free from adulteration and defects." (Id. ) Plaintiffs claim that they would not have purchased the thyroid tablets if they had known that these representations were false—that "the dosage was inconsistent with what was stated on the label, and that [they] [were] being exposed to imminent harm." (Id. )

B. Procedural History

Yachera filed this putative class action on October 3, 2018, asserting a variety of state-law claims against Westminster and CVS Pharmacy, Inc. (Dkt. 1) Defendants moved to dismiss, and Yachera elected to amend her Complaint, adding Shafer as a Plaintiff and Walgreen Co. as a Defendant. (Dkts. 17, 18, 31) The Amended Complaint asserts the following state-law claims based on Plaintiffs’ purchase and consumption of Westminster's adulterated thyroid tablets: (i) breach of express warranty, (ii) breach of the implied warranty of merchantability, (iii) deceptive trade practices in violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law and the Michigan Consumer Protection Act, (iv) unjust enrichment, (v) fraudulent concealment, (vi) fraud, (vii) conversion, (viii) strict liability based on a manufacturing defect, (ix) gross negligence, (x) negligence, and (xi) battery. (Dkt. 31 at ¶¶ 47-155) Plaintiffs also seek to represent a class of "all persons in the United States who purchased or paid for [t]hyroid [t]ablets that are subject to Westminster's recall or manufactured with adulterated components from Sichuan." (Id. ¶ 37)

Defendants again moved to dismiss, arguing that the Amended Complaint fails to establish Article III standing or adequately plead any claims for relief. (Dkts. 40, 41, 48) Defendants also sought to strike or dismiss the class allegations in the Amended Complaint. (Dkt. 41 at 30-35) On the same day they filed their response, Plaintiffs voluntarily dismissed CVS Pharmacy, Inc. and Walgreen Co. from this action, leaving Westminster as the sole remaining Defendant. (Dkts. 50, 51)

Following the completion of the motion-to-dismiss briefing, the Court stayed this matter pending the Eleventh Circuit's decision in Debernardis, a case both Parties had discussed in their briefs. (Dkt. 55 at 1) The Court explained that the Eleventh Circuit's decision would "at least be substantially instructive, and at most be dispositive, as to the issue of standing in this matter, a threshold question the Court must determine before deciding whether Plaintiffs have adequately stated their claims under Federal Rule of Civil Procedure 12(b)(6)." (Id. at 2) In November 2019, the Eleventh Circuit decided Debernardis, and the Parties subsequently submitted supplemental briefs addressing "the applicability and effect of the Eleventh Circuit's decision on the Article III standing arguments in this case." (Dkts. 57, 58, 59)

II. LEGAL STANDARDS

A. Rule 12(b)(1)

Federal courts are courts of limited jurisdiction. "[B]ecause a federal court is powerless to act beyond its statutory grant of subject matter jurisdiction, a court must zealously insure that jurisdiction exists over a case, and should itself raise the question of subject matter jurisdiction at any point in the litigation where a doubt about jurisdiction arises." Smith v....