United States District Court, N.D. California
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 ...