Corcoran v. CVS Health Corp., Inc.

          ORDER ON MOTION TO DISMISS THIRD AMENDED COMPLAINT RE: DKT. NO. 102

          YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE

         Plaintiffs Christopher Corcoran, Robert Garber, Toni Odorisio, Robert Guarnieri, Onnolee Samuelson, Michael Norkus, Vincent Gargiulo, Zulema Avis, Ken Bolin, Robert Jenks, Tyler Clark, Carolyn Caine, Linda Krone, Elizabeth Gardner, Carl Washington, Zachary Hagert, Debbie Barrett, Robert Podgorny, Kevin Cauley, Walter Wulff, Amanda Gilbert, and Gilbert Brown (collectively, “plaintiffs”) bring this action on behalf of themselves and all others similarly situated against defendant CVS Health Corporation (“defendant”) for allegedly overcharging them for generic prescription drugs. The Court previously granted motions to dismiss the second amended complaint (Dkt. No. 49, “SAC”) in part, namely dismissing: CVS Pharmacy, Inc. as a defendant; Counts 2, 5, 11, and 19 without leave to amend; and Count 12 under the Texas Deceptive Trade Practices Act with leave to amend. (Dkt. No. 96, “Order.”) Plaintiffs’ third amended complaint followed. (Dkt. No. 101, “3AC.”)

         Currently pending before the Court is defendant’s motion to dismiss in part the 3AC on two grounds, specifically that plaintiffs: (i) do not have Article III standing to assert the common law claims in Counts 1, 2, or 3 on behalf of absent class members whose claims are governed by state laws under which plaintiffs themselves cannot bring claims; and (ii) have again failed to allege facts sufficient to state a claim under the Texas Deceptive Trade Practices Act. (Dkt. No. 102.)

         Having carefully considered the papers submitted, the pleadings in this action, and for the reasons set forth below, the Court hereby Grants in Part and Denies in Part defendant’s motion as follows:

         I. Background

         The Court previously recounted the salient allegations in its order on defendant’s motions to dismiss the SAC. (See Order at 2-5). Because the pertinent allegations in the 3AC largely mirror those in the SAC, the Court will not repeat plaintiffs’ allegations herein. Plaintiffs did amend certain allegations pled in support of their claim under the Texas Deceptive Trade Practices Act and the Court addresses those amendments in more detail in Section III, infra.

         II. Motion to Dismiss Common Law Claims for Lack of Article III Standing Under Rule 12(b)(1)

         Defendant moves under Rule 12(b)(1) to dismiss the common law claims for fraud, negligent misrepresentation, and unjust enrichment in Counts 1, 2, and 3, respectively (collectively, “the common law claims”) under the laws of the thirty-eight states^[1] in which no named plaintiff resides or alleges to have purchased a generic drug prescription from defendant. More particularly, defendant contends that plaintiffs lack Article III standing to assert such claims. A motion to dismiss pursuant to Rule 12(b)(1) is a challenge to the Court’s subject matter jurisdiction. “Federal courts are courts of limited jurisdiction, ” and “[i]t is to be presumed that a cause lies outside this limited jurisdiction, ” unless shown otherwise. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The party invoking the jurisdiction of a federal court bears the burden of establishing that the court has the requisite subject matter jurisdiction to grant the relief requested. Id. Where, as here, the challenge is to the standing of plaintiffs as alleged in the complaint, the Court looks only to the allegations in the complaint and assumes the allegations in the complaint are true. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004).

         As a threshold matter, the Court rejects plaintiffs’ argument that defendant cannot raise this issue now because it was not raised in the previous motion to dismiss. Rule 12 explicitly provides that a court must consider issues of subject matter jurisdiction at any time, regardless of whether a defendant failed to raise it on a prior motion. See Fed. R. Civ. P. 12(h)(3). The Court is without subject matter jurisdiction over claims for which plaintiffs do not have Article III standing, and is therefore bound to consider this issue whenever it is raised, on its own motion, or even on appeal. Renee v. Duncan, 686 F.3d 1002, 1012 (9th Cir. 2012) (“Lack of Article III standing is a non-waivable jurisdictional defect that may be raised at any time, even on appeal after failing to raise it in the district court.”). Defendant simply cannot waive this argument.^[2]

         Plaintiffs next argue the 3AC pleads adequately Article III standing as to each of them. The Court agrees that the 3AC plausibly alleges Article III standing sufficient to bring plaintiffs’ individual claims. Although plaintiffs allege standing properly to bring the common law claims under the laws of the thirteen jurisdictions in which they reside and/or filled prescriptions, it does not necessarily follow that they allege standing properly under the laws of the thirty-eight other jurisdictions. “[S]tanding is claim- and relief-specific, such that a plaintiff must establish Article III standing for each of her claims and for each form of relief sought.” In re Carrier IQ, Inc., Consumer Privacy Litig., 78 F.Supp.3d 1051, 1064-65 (N.D. Cal. 2015) (internal quotations omitted) (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006) (“our standing cases confirm that a plaintiff must demonstrate standing for each claim he seeks to press”)). “In a class action, standing is satisfied if at least one named plaintiff meets the requirements.” Ollier v. Sweetwater Union High Sch. Dist., 768 F.3d 843, 865 (9th Cir. 2014) (quoting Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) (en banc)).

         Here, no plaintiff resides in, or alleges to have suffered an injury in, any of the thirty-eight states at issue in defendant’s motion. In such instances, the consensus among courts in this District, including the undersigned, is that named plaintiffs “lack standing to assert claims based on those states’ laws.” Fenerjian v. Nongshim Co. Ltd., 72 F.Supp.3d 1058, 1082-83 (N.D. Cal. 2014) (dismissing state-law claims where no named plaintiff resided or suffered an injury); accord In re Carrier IQ, 78 F.Supp.3d at 1075 (concluding that “named Plaintiffs do not have standing to assert claims from states in which they do not reside or did not purchase [the product at issue]”); In re Lithium Ion Batteries Antitrust Litig., 2014 WL 4955377, at *16-18 (N.D. Cal. Oct. 2, 2014) (recognizing the “principle that a class cannot assert a claim on behalf of an individual that they cannot represent”) (internal quotations and alterations removed); Pardini v. Unilever United States, Inc., 961 F.Supp.2d 1048, 1061 (N.D. Cal. 2013) (holding plaintiff “does not have standing to assert a claim under the consumer protection laws” of states other than California, where the plaintiff purchased the product); In re Flash Memory Antitrust Litig., 643 F.Supp.2d 1133, 1163- 64 (N.D. Cal. 2009) (“Where, as here, a representative plaintiff is lacking for a particular state, all claims based on that state’s laws are subject to dismissal.”) (emphasis removed) (citing In re Graphics Processing Units Antitrust Litig., 527 F.Supp.2d 1011, 1026 (N.D. Cal. 2007)); In re Apple & AT & TM Antitrust Litig., 596 F.Supp.2d 1288, 1309 (N.D. Cal. 2008) (granting motion to dismiss claims under all jurisdictions except those in which the named plaintiffs resided).

         The Court previously dismissed plaintiffs’ claim under the Rhode Island Deceptive Practices Act, finding that no named plaintiff had Article III standing to invoke Rhode Island law because there was no allegation that any transaction occurred in Rhode Island. (Order at 22-24.) The same reasoning applies equally here. Plaintiffs do not have standing to bring the common law claims under the laws of the thirty-eight states to which they have alleged no connection. The common law claims brought based on the laws of those states are therefore Dismissed.

         The Court disagrees with plaintiffs’ view that the better approach is to wait and address this issue in connection with class certification. District courts may exercise discretion to defer consideration of standing until after class certification. See In re Carrier IQ, 78 F.Supp.3d at 1068-75 (citing cases). The facts of this case, however, counsel against exercising that discretion. The named plaintiffs reside in twelve different states and one plaintiff alleges to have been injured in the District of Columbia. (3AC ¶¶ 16-37.) Thus, their claims involve, at most, the laws of thirteen jurisdictions. Putative class members from the thirty-eight other states for which the common law claims are asserted in Counts 1, 2, and 3 “is vast relative to the claims to which [plaintiffs] have standing.” Id. at 1074. In these circumstances, plaintiffs should be required to have named plaintiffs with standing to prosecute claims under the laws of those thirty-eight states. Id. Further, it remains to be seen the extent to which a nationwide class could be certified given the allegations. See Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 591 (9th Cir. 2012).

         Accordingly, the dismissal is Without Prejudice to plaintiffs being able to amend their pleading to include additional named plaintiffs, subject ...