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Krueger v. Wyeth Inc

United States District Court, S.D. California

July 1, 2019

APRIL KRUEGER, individually and on behalf of all others similarly situated, Plaintiff,
WYETH, INC. f/k/a AMERICAN HOME PRODUCTS, a Pennsylvania corporation; WYETH PHARMACEUTICALS f/k/a WYETH-AYERST PHARMACEUTICALS, a Pennsylvania corporation; and DOES 1 through 100 Inclusive, Defendants.




         This matter comes before the Court on Defendants Wyeth, Inc. and Wyeth Pharmaceuticals, Inc.'s (collectively “Wyeth” or “Defendants”) motion to exclude expert testimony and motion for summary judgment, or in the alternative, partial summary judgment pursuant to Rule 56(a) of the Federal Rules of Civil Procedure (“Fed. R. Civ. P.”) See Doc. Nos. 317, 341. Both motions have been fully briefed by the parties. See Doc. Nos. 326, 340, 342, 350, 351, 353, 359, 360. After careful consideration of the record, pleadings and exhibits submitted by the parties, oral argument from counsel, and for the reasons set forth below, the Court DENIES Wyeth's motion to exclude Professor Rosenthal's testimony (doc. no. 317), DENIES Wyeth's motion for summary judgment and GRANTS Wyeth's motion for partial summary judgment. Doc. No. 341.

         Factual Background

         Defendants manufacture a variety of hormone replacement therapy (“HRT”) products, including the drugs known as Prempro, Premarin and Premphase. Between 1995 and 2002, Wyeth employed a standardized pervasive marketing campaign in California, and throughout the United States, aimed at “rebalancing” consumer and prescriber perceptions about the risks and benefits of Wyeth's HRT drugs. Defendants positioned themselves as the authoritative source on HRT and developed strategies, campaigns, education materials, and presentations to neutralize the global fear of breast cancer. Doc. Nos. 351- 24, 32, 35, 36. Defendants created articles discussing the myths and mis-perceptions relating to breast cancer and HRT with suggestive readings authored by hired consultants to refute negative HRT information. Doc. No. 351-62. These materials and guides were created by Defendants' home office and the information was uniformly distributed to their sales force nationwide. Doc. Nos. 351-4, 6. It was also disseminated in advertisements using celebrities, publications targeting women, and in “Dear Doctor” letters aimed at reaching those physicians treating women with menopausal symptoms. Doc. Nos. 351-34, 351-35 at 28, 351-48, 50-52; 351-28, 29. Wyeth promoted that its HRT drugs protected women from cardiovascular disease, and had other cognitive benefits, despite the Food and Drug Administration (“FDA”) prohibiting “off-label” promotion prior to standardized verification. Doc. No. 351-17 at 10 (Parisian, M.D. Decl., at 10). Although Wyeth warned of a moderate risk of breast cancer on its Prempro label, it qualified the risk as being associated with higher doses and prolonged use, in excess of 10 years. Id. at 13. These representations were made despite clinical data showing an increased risk of breast cancer at any dose and several studies reporting an increased risk of breast cancer following usage significantly less than ten years. Id. (citing to various studies published before and during the relevant time frame indicating increased risk after only a short exposure) (i.e. Bergkvist, 1989: 2 years; Wyeth's Pivotal Trial, 1994: One year; Schairer, 1994: 2 years; Gapstur, 1999: Less than 5 years; Schairer, 2000: 4 years). Nonetheless, between 1995 and 2002, Defendants' label remained unchanged. Id. at 13.

         California women were prescribed HRT by their physicians for the “treatment of moderate to severe vasomotor symptoms associated with menopause (hot flashes, night sweats), vulvar and vaginal atrophy, and the prevention of osteoporosis.” See Doc. No. 317-3 at 5. Just under 47, 000 HRT drug prescriptions were purchased by Californians during the class period at a cost of approximately $1.3 billion. Doc. No. 351-7 at 2 (Rosenthal, Ph.D. Decl. at 2). By 1997, Wyeth's HRT drugs were the most prescribed drugs in the United States, used by over 9 million women. Doc. Nos. 351-9, 351-35 at 3. However, in 2002, the National Health Institute removed Prempro from the Women's Health Initiative (“WHI”) clinical trial due to the increased rate of disease present among participants, including breast cancer and cardiovascular complications. Doc. Nos. 351-11, 351-12, 351-15. In 2004, Premarin was also removed based on study participants experiencing a 39 % increased risk of stroke and a 47% increased risk of blood clots. Doc. No. 351-12. Subsequent reports issued by investigators showed that HRT increased risks of breast cancer, strokes, venous thromboembolic disease, heart attacks, cardiovascular disease, Alzheimer's disease, and dementia. Id.

         At the time the study was terminated, 53.8% of women had already stopped taking the HRT. Doc. No. 351-12 at 6. Although some women began hormone therapy use outside of the study through their own health clinicians, many women stopped taking hormone therapy altogether. Id.; 351-15 at 2. Prescriptions of Prempro declined by 66% and Premarin 33% from the first half of 2002 to the first half of 2003. Doc. No. 351-15 at 2; see also Doc. Nos. 351-13 at 3, 351-14.

         This representative action arises from Plaintiff April Krueger's (“Plaintiff” or “Krueger”) allegation that, between January of 1995 and January of 2003 (“class period”), Defendants violated California consumer protection laws. The gravamen of Plaintiff's claims is that Defendants misrepresented the health risks associated with their HRT drugs during a long term, nationwide, marketing campaign, conducted in violation of (1) California's Unfair Competition Laws, Cal. Bus. & Prof. Code §§ 17200-17210 (“UCL”); and (2) the California Consumer Legal Remedies Act, Cal. Civ. Code §§ 1750-1784 (“CLRA”). See Doc. No. 1. Plaintiff, on behalf of herself and others similarly situated (“Class” or “class members”), seek both damages and restitution. Pursuant to the CLRA, Plaintiff seeks actual damages as a result of purchasing Defendants' HRT products during the class period (doc. no. 326 at 8). Plaintiff also seeks restitution of the full purchase price or restitutionary disgorgement of the net profits Defendants earned from class members as result of the allegedly unfair practices. Id. at 10.

         Plaintiff retained the services of Professor Meredith Rosenthal, Ph.D. (“Dr. Rosenthal”) to establish the damage of the alleged misconduct on the Class. See Doc. No. 326-2 at 2-9. Dr. Rosenthal was directed to utilize the class definition certified by this Court on March 29, 2011 (doc. nos. 108, 326-2 at 4-5) and “assume that all California consumers who purchased Premarin, Prempro, and/or Premphase” would constitute members of the Class unless they had a personal injury claim. Id. at 5. She “calculated damages incurred by [] end-payer purchasers of Wyeth's [HRT] products[.]” Id. at 2. As a result, she provided the following opinions: (1) total dollar amount spent on prescriptions ($1.3 billion); (2) total out-of-pocket cost paid by class members ($590.2 million); and (3) profit earned by Wyeth as a result of sales to members of the class ($771.6 million), all of which were limited to the class period. Id. at 6. The Full Prescription Price scenario calculates the retail cost of Defendants' HRTs, as to all California consumers (excluding personal injury claimants), by multiplying “the total number of prescriptions sold in California” by “the full retail prescription price.” Id. at 7. The Out-of-Pocket Payments scenario was calculated by taking the total amount paid for non-Medi-Cal prescriptions and excluding insurance payments from the total purchase price.[5] Both the full prescription price and the out-of-pocket costs are referred to in the report as “refund” damages. Id. Last, the Wyeth Profit (i.e. Restitutionary Disgorgement) scenario, based on profit and loss statements produced by Defendants, offers the “total net profits earned as a result of sales of Premarin, Premphase and Prempro to California consumers during the class period.” Id. at 9.

         On March 28, 2016, Defendants filed the instant motion to exclude the opinions of Dr. Rosenthal on the grounds that her calculations fail to account for the value or benefit class members received from use of Defendants' HRT products. See Doc. No. 317. Defendants later filed the instant motion for summary judgment, arguing no genuine dispute of material fact exists as to certain elements of the alleged violations: (1) damages and (2) injury and reliance of absent class members. See Doc. No. 341. Both motions have been fully briefed and argued by the parties. See Doc. Nos. 350, 353. Wyeth filed a notice of supplemental authority in support of its pending motions and Plaintiff filed a response. Doc. Nos. 359, 360. The motions are now before the Court.

         Legal Standard

         A. Summary Judgment Summary judgment is appropriate under Rule 56(c) of the Federal Rules of Civil Procedure where the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). A dispute about a material fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248.

         A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. See Celotex, 477 U.S. at 323. The moving party may satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. Id. at 322-23. Where the party moving for summary judgment does not bear the burden of proof at trial, it may show that no genuine issue of material fact exists by demonstrating that “there is an absence of evidence to support the non-moving party's case.” Id. at 325. The moving party is not required to produce evidence showing the absence of a genuine issue of material fact, nor is it required to offer evidence negating the nonmoving party's claim. Lujan v. National Wildlife Fed'n, 497 U.S. 871, 885 (1990). “Rather, the motion may, and should, be granted so long as whatever is before the District Court demonstrates that the standard for the entry of judgment, as set forth in Rule 56(c), is satisfied.” Id. (quoting Celotex, 477 U.S. at 323). If the moving party fails to discharge this initial burden, summary judgment must be denied, and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).

         If the moving party meets the initial burden, the nonmoving party cannot defeat summary judgment merely by demonstrating “that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); see also Anderson, 477 U.S. at 252 (“[t]he mere existence of a scintilla of evidence in support of the nonmoving party's position is not sufficient.”). Rather, the nonmoving party must “go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324 (quoting Fed.R.Civ.P. 56(e) (internal quotations omitted)). The court may not make credibility determinations, and inferences to be drawn from the facts must be viewed in the light most favorable to the party opposing the motion. See Masson v. New Yorker Magazine, 501 U.S. 496, 520 (1991); Anderson, 477 U.S. at 255; Matsushita, 475 U.S. at 587.

         B. Expert Witness Qualification

         Federal Rule of Evidence 702 governs the admissibility of expert witnesses. Expert witnesses can testify to “scientific, technical, or other specialized knowledge” that will assist the “trier of the fact [in] understand[ing] the evidence or to determine a fact in issue.” Fed. R. Evid. 702. Proponents of the expert witness have the burden of demonstrating the admissibility of the testimony. See Lust ex rel. Lust v. Merrell Dow Pharms., 89 F.3d 594, 598 (9th Cir. 1996). The offering party must prove by preponderance of evidence that its expert witness' testimony is admissible. See Stambolian v. Novartis Pharm. Corp., No. CV 12-0437, 2013 WL 6345566, at *3 (C.D. Cal. Dec. 6, 2013) (citing Lust ex rel. Lust, 89 F.3d at 598). Failure to show admissibility of an expert witness will result in the exclusion of the witness. See Mesfun v. Hagos, No. CV 03-02182, 2005 WL 5956612, at *2 (C.D. Cal. Feb. 16, 2005) (holding expert witness is excluded because offering party failed to show how opinion was more than “rank speculation”).

         Expert testimony is admissible pursuant to Rule 702 if it is both relevant and reliable. Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993). Reliability requires that an expert's testimony “have a reliable basis in the knowledge and experience of his discipline.” Estate of Barabin v. AstenJohnson, Inc., 740 F.3d 457, 462 (9th Cir. 2014) (quoting Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 141 (1999)). A trial court will not weigh the accuracy of the testimony of an expert witness, rather the court must determine if the expert's testimony is grounded in principals and methodology employed in a particular field of study. Advisory Committee Notes to Rule 702, 2000 Amendments (proponents are not required to show by a “preponderance of the evidence that the assessments of their experts are correct, they only have to demonstrate by a preponderance of evidence that their opinions are reliable . . . the requirement of reliability is lower than the merits standard of correctness”) (quoting In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 744 (3d Cir. 1994)).

         Reliable expert testimony may still be inadmissible if it is irrelevant. Evidence is relevant when it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Fed. R. Evid. 401. If expert opinion does not assist the trier of fact with deciding a pertinent factual issue, the testimony is irrelevant and therefore inadmissible. When considering the admissibility of an expert witness, the court acts as a “gatekeeper” rather than a fact finder. Primiano v. Cook, 598 F.3d 558, 564 (9th Cir. 2010) (citing Daubert, 509 U.S. at 594, 596). As the gatekeeper, the Court makes a “‘preliminary assessment of whether the reasoning or methodology underlying the testimony is scientifically valid and whether that reasoning or methodology properly can be applied to the facts in issue.'” Daubert, 509 U.S. at 592-93 (citation omitted). Where the expert witness meets the criteria of Rule 702, the trial court has broad discretion whether to admit the evidence. Id. (finding juries should be given leave to act as a fact-finder on the conclusions of an expert witness).


         Wyeth moves for summary judgment challenging the sufficiency of Plaintiff's evidence: first as to damages after moving to exclude Plaintiff's expert opinion; and second as to injury and reliance on the alleged misrepresentations and omissions by absent class members. Because the latter raises an issue as to Article III standing and the jurisdiction of this Court over unnamed class members, the Court addresses these issues in reverse order.

         A. Evidence of Injury and Reliance

         Wyeth contends it is entitled to summary judgment against absent class members because Plaintiff has not produced evidence of injury or reliance by class members on the alleged misrepresentations and omissions. Defendants emphasize that at the summary judgment phase, it is not enough to allege that class members were likely to be deceived and injured by Defendants' actions. Instead, Defendants argue that Plaintiff must produce competent evidence that class members actually relied on the alleged misrepresentations and were injured as a result.

         Quoting the March 30, 2011 order granting in part and denying in part class certification, Plaintiff relies on this Court's ruling that under the UCL, the injury in fact requirement is limited to the named representative, not the putative class as a whole. Krueger v. Wyeth, Inc., No. 03CV2496 JAH AJB, 2011 WL 8971449, at *10 (S.D. Cal. Mar. 30, 2011. Plaintiff highlights this Court's prior ruling, citing McAdams v. Monier, Inc., 182 Cal.App.4th at 192, that “individualized proof of deception, reliance, and injury is not necessary under California law for class members to prevail on class claims.” Krueger, WL 8971449, at *12. Under both the UCL and CLRA reliance may be inferred when the facts show that material misrepresentations were made to the entire class. In re Vioxx, 180 Cal.App.4th 116, 129(2009).[6]

         Indeed, as the Ninth Circuit has explained:

Unlike common-law fraud claims that focus on the victim's reliance or damages, the UCL focuses on the perpetrator's behavior: “to state a claim under either the UCL or the false advertising law ... it is necessary only to show that members of the public are likely to be deceived.” In re Tobacco II Cases, 46 Cal.4th 298, 312, 569-70 (2009). Actual falsehood, the perpetrator's knowledge of falsity, and perhaps most importantly, the victim's reliance on the false statements-each of which are elements of common-law fraud claims-are not required to show a violation of California's UCL. (citations omitted).

Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1068 (9th Cir. 2014), abrogated by Microsoft Corp. v. Baker, 137 S.Ct. 1702 (2017); see also Waller v. Hewlett-Packard Co., 295 F.R.D. 472, 476 (S.D. Cal. 2013) (elements of common law fraud aren't incorporated into a UCL claim).

         Nonetheless, Article III standing requires the injury-in-fact to be “fairly traceable” to defendant's misconduct. In re Deepwater Horizon, 739 F.3d 790, 799 (5th Cir. 2014) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (listing the elements of Article III standing: injury in fact, the injury's traceability to the defendant's conduct, and the potential for the injury to be redressed by the relief requested).

         1. Article III Standing

         Since the issuance of this Court's 2011 order certifying the class, various courts have discussed how to evaluate Article III standing for the purposes of class certification. In In re Deepwater Horizon, the Fifth Circuit discusses in moderate detail the two different approaches courts have followed: (1) focusing exclusively on individual standing of the “named plaintiffs” or “class representatives” and ignoring absent class members entirely, and (2) examining the class definition to ensure absent class members possess Article III standing. 739 F.3d 790, 800-01 (5th Cir. 2014).

         Prior to the Ninth Circuit decision in Mazza, district courts were heavily split on this issue. See Webb v. Carter's Inc., 272 F.R.D. 489 (C.D.Cal.2011)(analyzing standing of proposed class members); O'Shea v. Epson America, Inc., 2011 WL 4352458 (C.D.Cal. Sept. 19, 2011) (examining the class definition to ensure standing); Gonzales v. Comcast Corp., 2012 WL 10621 (E.D.Cal. Jan. 3, 2012)(same); Cf. Bruno v. Quten Research Inst., LLC, 280 F.R.D. 524 (C.D.Cal.2011) (focusing only on named plaintiff); In re Google AdWords Litig., 2012 WL 28068 at *10 (N.D.Cal. Jan. 5, 2012) (same); Agne v. Papa John's Int'l, Inc., 286 F.R.D. 559, 565 (W.D.Wash.2012) (acknowledging the split, but taking no position). However, neither approach requires Plaintiff to submit evidence of each class member's standing as Defendants suggest. “The core function of class actions, wherein named plaintiffs represent a passive group of class members, would be significantly compromised” if class members were required to submit evidence of their standing. Newberg on Class Actions § 2:3 (5th ed.).

Notably, the Ninth Circuit has employed both approaches. In Stearns v. Ticketmaster Corp., the court held that “our law keys on the representative party, not all of the class members.” 655 F.3d 1013, 1021 (9th Cir. 2011). However, this conclusion followed recognition that “each alleged class member was relieved of money in the transactions” and that the loss, presumably of each class member, was “fairly traceable to the action of the Appellees.” Id. In Mazza, the Ninth Circuit followed the test set forth in Denney v. Deutsche Bank AG:
We do not require that each member of a class submit evidence of personal standing. At the same time, no class may be certified that contains members lacking Article III standing. The class must therefore be defined in such a way that anyone within it would have standing.

443 F.3d 253, 263-64 (2d Cir.2006)(citations omitted); see Mazza v. Am. Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012)(examining the class definition).

         In Mazza, the court found the named plaintiff's allegations sufficient to withstand the standing challenge at the class certification stage, but that the district court erred in finding that a class-wide inference of reliance on the misrepresentations was appropriate. In Mazza, the Ninth Circuit vacated the class certification order, holding that the class definition certified by the district court was overboard because it was not defined in such a way as to include only members who were exposed to advertising that is alleged to be materially misleading. Although this Court has already explained that the exposure issue is not present here due to the massive advertising campaign employed by Defendants (see Krueger v. Wyeth, Inc., 310 F.R.D. 468, 479-82 (S.D. Cal. 2015); see also Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1137 (9th Cir. 2016)), the Court must assure itself that there is “a causal connection between the injury and the conduct complained of…” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

         This Court joins the multiple others in our circuit that have followed Mazza. See, e.g., Walker v. Life Ins. Co. of the Sw., 2012 WL 7170602 (C.D.Cal. Nov. 9, 2012); Guido v. L'Oreal, USA, Inc., 284 F.R.D. 468, 474-75 (C.D.Cal.2012); Tietsworth v. Sears, Roebuck and Co., 2012 WL 1595112 at *14 (N.D.Cal. May 4, 2012); Baxter v. Rodale, 2012 WL 1267880 at *2 (Apr. 12, 2012); In re TFT-LCD (Flat Panel Antitrust Litig.), 2012 WL 253298 at *1 n. 2 (N.D.Cal. Jan. 26, 2012). Defining the class in such a way as to ensure the standing of the class is necessary to avoid inconsistencies and inequities that would inevitably occur if plaintiffs were allowed to sue as class members, but not as individuals. From an evidentiary standpoint at summary judgment, only the named plaintiff or class representative must produce evidence to support Article III standing. Id. (plaintiff, as the party invoking federal jurisdiction, bears the burden of establishing these elements). However, that does not alleviate the Court's obligation to confirm standing as to the Class. See Ortiz v. Fibreboard Corp., 527 U.S. 815, 831 (1999)(finding that Article III standing of class members may be resolved after class certification issues, which themselves pertain to statutory standing). The traditional doctrine of standing “ensures that federal courts do not exceed their authority and imposes limitations on the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547. Such litigants include passive class members. Thus, the Court must engage in a two-step analysis: (1) ensuring that individual standing of the named plaintiff is supported by competent evidence and (2) examining the class definition to ensure that anyone within it would have standing.

         a. Evidence of Named Plaintiff's Individual Standing

         Plaintiff contends that she would not have purchased Defendants' HRT products “but for” Defendants' minimization and omission of information regarding serious health risks and misrepresentation of health benefits. Plaintiff must therefore produce evidence that she was relieved of each dollar she spent because of Wyeth's deceptive conduct. See Mazza, 666 F.3d 581, 595. Plaintiff provided the following testimony:

Q. And what prompted you to decide to stop?
A. That, um, I discussed it with my doctor at the time, and she wanted -- she really ...

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