Zottola v. Eisai Inc.

BARBARA ZOTTOLA, on behalf of herself and all others similarly situated, Plaintiff, v. EISAI INC., et al., Defendants.

No. 20-CV-02600 (PMH)

United States District Court, S.D. New York

September 29, 2021

MEMORANDUM OPINION AND ORDER

PHILIP M. HALPERN, UNITED STATES DISTRICT JUDGE

Barbara Zottola (“Plaintiff”) brings this putative class action against Eisai Inc. (“Eisai”), Arena Pharmaceuticals, Inc. (“Arena”), and CVS Pharmacy, Inc.^[1] (“CVS” and collectively “Defendants”), alleging that Defendants knew of and failed to disclose that Belviq, a weight loss drug, posed a high risk of cancer. Plaintiff asserts claims against Defendants for: (1) violation of New York General Business Law (“NYGBL”) § 349; (2) violation of NYGBL § 350; (3) breach of the implied warranty of merchantability; (4) fraud; (5) fraudulent concealment; (6) unjust enrichment; and (7) conversion. Plaintiff seeks monetary damages, declaratory relief, injunctive relief costs and expenses (including attorney's fees), and certification of a putative nationwide class and New York subclass.

BACKGROUND

I. Factual Background

Eisai and Arena manufactured and distributed the prescription weight loss medications Belviq and Belviq XR (together, the “Medications”).^[2] (Doc. 1, “Compl.” ¶¶ 1-2). The active ingredient in the Medications was lorcaserin, a serotonin receptor agonist, which was intended to reduce appetite. (Id. ¶ 2). On February 13, 2020, the U.S. Food and Drug Administration (“FDA”) issued a “Drug Safety Communication” advising that the FDA was requesting the withdrawal of the Medications from the market due to the “increased occurrence of cancer” caused by lorcaserin. (Id. ¶¶ 3-6, 21).

Plaintiff alleges that Eisai and Arena knew about the elevated cancer risk posed by the Medications “from the early stages of research and development, ” but nevertheless “pushed forward with the approval process.” (Id. ¶¶ 1, 8, 15). Specifically, Plaintiff alleges that Eisai and Arena “minimize[ed], ” “downplay[ed], ” and “obfuscate[ed]” the results of a 2007 “long-term carcinogenic rat study, ” which “indicated that lorcaserin was causing rare and aggressive tumors in rats.” (Id. ¶¶ 8-9). The results of the rat study, including the tumor findings, were submitted in February 2009 to the FDA. (Id. ¶ 11). The FDA ultimately approved Belviq in June 2012 and Belviq XR in July 2016. (Id. ¶ 2).

Plaintiff was prescribed, purchased, and used Belviq several times over the course of two years.^[3] (Id. ¶ 27). She filled at least one Belviq prescription at a CVS pharmacy in Warwick, New York. (Id.). She allegedly “reviewed the accompanying labels and disclosures” when purchasing Belviq and “relied on these representations and warranties” in making her purchases. (Id.). Plaintiff seeks to represent a nationwide class of “all persons in the United States who purchased Belviq or Belviq XR” and a subclass of individuals “who purchased Belviq or Belviq XR in New York.” (Id. ¶¶ 33, 35). Plaintiff and the putative class members were allegedly “injured by the full purchase price of” the Medications, because had “Eisai and Arena been forthright with the FDA regarding the animal studies conducted beginning in 2007, and the true cancer risk of the [M]edications, the [M]edications would never have made it to market.” (Id. ¶ 27).

II. Procedural History

Plaintiff filed her Complaint on March 27, 2020. (Compl.). Eisai filed a pre-motion letter regarding its anticipated motion to dismiss on June 5, 2020 (Doc. 21), to which Plaintiff responded on June 12, 2020 (Doc. 22). CVS filed a pre-motion letter regarding its anticipated motion to dismiss on June 17, 2020 (Doc. 23), to which Plaintiff responded on June 24, 2020 (Doc. 24). Arena filed a pre-motion letter regarding its anticipated motion to dismiss on July 10, 2020 (Doc. 32), to which Plaintiff responded on July 17, 2020 (Doc. 34). The Court held a telephonic pre-motion conference on July 29, 2020. (See July 29, 2020 Min. Entry).

Defendants, in accordance with the briefing schedule set at the pre-motion conference, moved to dismiss the Complaint on September 9, 2020. (Doc. 41; Doc. 42, “Defs. Br.”; Doc. 43, “Eisai Supp. Br.”; Doc. 45; Doc. 46, “CVS Supp. Br.”; Doc. 47; Doc. 48, “Arena Supp. Br.”).^[4]Plaintiff filed her opposition to Defendants' joint brief in support of their motions to dismiss, as well as her supplemental opposition briefs on October 29, 2020. (Doc. 49, “Pl. Opp.”; Doc. 50; Doc. 51, “Pl. CVS Supp. Opp.”; Doc. 52). Defendants filed their joint reply brief and supplemental reply briefs on November 16, 2020. (Doc. 53, “Defs. Reply”; Doc. 54; Doc. 55, “CVS Reply”; Doc. 56).

STANDARD OF REVIEW

On a Rule 12(b)(6) motion, a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face “when the ple[d] factual content allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant acted unlawfully.” Id. The factual allegations pled “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.

“When there are well-ple[d] factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. Thus, the Court must “take all well-ple[d] factual allegations as true, and all reasonable inferences are drawn and viewed in a light most favorable to the plaintiff[].” Leeds v. Meltz, 85 F.3d 51, 53 (2d Cir. 1996). The presumption of truth, however, “‘is inapplicable to legal conclusions,' and ‘[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.'” Harris v. Mills, 572 F.3d 66, 72 (2d Cir. 2009) (quoting Iqbal, 556 U.S. at 678 (alteration in original)). Therefore, a plaintiff must provide “more than labels and conclusions” to show entitlement to relief. Twombly, 550 U.S. at 555.

ANALYSIS

I. NYGBL Sections 349 and 350

Plaintiff's first two claims for relief are based on alleged violations of §§ 349 and 350 of the NYGBL. (Compl. ¶¶ 43-65). “Section 349 ‘prohibits deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state.'” Shakespeare v. Compu-Link Corp., 848 Fed.Appx. 474, 476 (2d Cir. 2021) (quoting Orlander v. Staples, Inc., 802 F.3d 289, 300 (2d Cir. 2015)). Section 350 “prohibits false advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state.” Orlander, 802 F.3d at 300 (internal quotation marks and brackets omitted). “‘The standard for recovery under . . . § 350, while specific to false advertising, is otherwise identical to [§] 349,' and therefore the Court will merge its analysis of the two claims.” Cosgrove v. Oregon Chai, Inc., 520 F.Supp.3d 562 (S.D.N.Y. 2021) (quoting Goshen v. Mut. Life Ins. Co. of N.Y., 774 N.E.2d 1190 (N.Y. 2002)). “To successfully assert a claim under either section, ‘a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.'” Orlander, 802 F.3d at 300 (quoting Koch v. Acker, Merrall & Condit Co., 967 N.E.2d 675 (N.Y. 2012)).^[5]

Defendants argue that Plaintiff fails to state a claim under either § 349 or § 350 because Plaintiff has failed to allege: (1) a cognizable injury; (2) that Defendants engaged in “consumer-oriented conduct”; and (3) that Defendants' conduct was “materially misleading.” (Defs Br. at 6-12). The Court agrees.

First, Plaintiff fails to allege that she suffered a cognizable injury because she merely alleges that she and other class members “would not have purchased [the Medications] if they knew the [M]edications caused a significantly elevated risk of cancer.” (Compl. ¶¶ 64, 75). Under New York law, a plaintiff's allegation that he or she bought a product that he or she “would not have purchased, absent a manufacturer's deceptive commercial practices” is insufficient to establish a cognizable injury under NYGBL §§ 349 and 350. Small v. Lorillard Tobacco Co., 720 N.E.2d 892, 898 (N.Y. 1999). Therefore, Plaintiff's theory of injury here is a nonstarter.

The plaintiffs, in Small v. Lorillard Tobacco Company alleged that they would not have purchased cigarettes had they known that nicotine was addictive. See 720 N.E.2d at 898. According to the plaintiffs, however, addiction was not their injury; rather, they were injured by paying the purchase price of cigarettes without being able to make “free and informed choices as consumers” due to the defendant cigarette company's alleged misrepresentations. Id. The Court of Appeals held that this “definition of injury is legally flawed” because the plaintiffs did not allege that “the cost of cigarettes was affected by the alleged misrepresentation” regarding the addictive nature of nicotine, “nor [did] they seek recovery for injury to their health as a result of their ensuing addiction.” Id.; see also Baron v. Pfizer, Inc., 840 N.Y.S.2d 445, 448 (App. Div. 2007) (holding that plaintiff's allegation that she “would not have purchased” the prescription drug Neurontin “absent defendant's deceptive...