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Baron v. Pfizer, Inc., App. Div. 3d Dept., July 5, 2007 — Summary of Opinion (Mercure, J.)

Factual and Procedural Background

Plaintiff commenced a putative statewide class action on behalf of persons who purchased the drug Neurontin for off-label uses (uses not approved by the Food and Drug Administration). Parke-Davis (a division of Warner-Lambert), later acquired by defendant Pfizer, had FDA approval to market Neurontin for epilepsy but, from June 1995 to April 2000, allegedly promoted Neurontin for off-label uses including various pain conditions and psychiatric disorders. After a six-year federal investigation, Warner-Lambert pleaded guilty to introducing a misbranded drug without adequate directions for intended uses and introducing an unapproved new drug into interstate commerce, agreeing to a $240 million criminal fine and $190 million in civil fines, largely to reimburse Medicaid programs.

Plaintiff alleged claims for common-law fraud (which she expressly abandoned on appeal), violation of General Business Law § 349, and unjust enrichment, based on being prescribed Neurontin for neck pain (an off-label use). Following joinder of issue but before class certification, defendant moved to dismiss the proposed class action complaint in its entirety pursuant to CPLR 3211(a)(7) and 3016(b). Supreme Court granted defendant's motion and dismissed the complaint and dismissed as academic plaintiff's pending motions to compel discovery and for class certification. Plaintiff appealed; the Appellate Division affirmed.

Legal Issues Presented

  1. Whether the complaint sufficiently alleges an injury caused by defendant's alleged consumer-oriented deceptive acts or practices so as to state a claim under General Business Law § 349.
  2. Whether the complaint adequately states a claim for unjust enrichment (i.e., whether defendant was enriched at plaintiff's expense and it would be inequitable for defendant to retain the benefit).
  3. Whether the court should have sua sponte granted plaintiff leave to amend her complaint where she did not expressly request leave to amend.

Arguments of the Parties

Appellant's Arguments

  • Plaintiff contended that she paid for Neurontin which was prescribed for an off-label use (neck pain) and seeks a refund of the purchase price on the ground that she would not have purchased the drug but for defendant's allegedly deceptive promotional practices.
  • Plaintiff pursued claims under General Business Law § 349 and unjust enrichment based on the off-label prescription and use.
  • Plaintiff expressly abandoned her appeal as to the dismissal of her common-law fraud claim.

Respondent's Arguments

  • Respondent moved to dismiss the complaint under CPLR 3211(a)(7) and 3016(b), challenging the sufficiency of the pleading to state cognizable claims.
  • The parties' central dispute, as framed by the opinion, focused on whether plaintiff adequately alleged that she suffered an injury as a result of defendant's allegedly deceptive acts; the court treated respondent's position as asserting that plaintiff did not allege actual or pecuniary harm required under GBL § 349 and did not establish the elements required for unjust enrichment.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
EBC I, Inc. v Goldman, Sachs Co., 5 NY3d 11 Standard on motion to dismiss: pleadings construed liberally, allegations taken as true, plaintiff given benefit of inferences. Used to state the governing standard for adjudicating a CPLR 3211(a)(7) dismissal motion.
Skibinsky v State Farm Fire Cas. Co., 6 AD3d 975 Support for applying liberal pleading construction in dismissal context. Cited as additional authority supporting the dismissal standard.
1455 Washington Ave. Assoc. v Rose Kiernan, 260 AD2d 770 Support for applying liberal pleading construction in dismissal context. Cited as additional authority supporting the dismissal standard.
Leon v Martinez, 84 NY2d 83 Court may consider affidavits submitted by plaintiff to remedy defects in the complaint. Stated as an available remedy where pleadings may be supplemented by affidavits; court noted the principle while applying dismissal analysis.
Small v Lorillard Tobacco Co., 94 NY2d 43 Interpretation of GBL § 349: deceptive consumer-oriented acts must cause injury; rejected that purchase alone (what consumer would not have bought absent deception) constitutes injury under § 349. Central to the court's holding that plaintiff's allegation of purchase alone does not constitute cognizable injury under § 349 without additional allegations of pecuniary or actual harm.
Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20 GBL § 349 requires deceptive acts or practices that are "deceptive or misleading in a material way and that plaintiff has been injured by reason thereof." Quoted as stating the injury element required under § 349 and used to analyze plaintiff's failure to allege actual harm.
Stutman v Chemical Bank, 95 NY2d 24 Elaboration that a plaintiff must allege that deceptive acts caused actual harm directly to plaintiff. Used to reinforce the requirement that GBL § 349 requires actual harm beyond mere deception.
Blue Cross Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200 Further discussion of GBL § 349 injury requirement (actual harm). Cited to support the court's view that actual harm, not mere purchase, is required under § 349.
Buckman Co. v Plaintiffs' Legal Comm., 531 US 341 Referenced in connection with discussion of off-label use and regulatory context (federal decisions on related topics). Used to support the court's observation that off-label use is a widespread and accepted medical practice; cited as authority in that context.
Washington Legal Found. v Henney, 202 F3d 331 Referenced regarding off-label use being widespread and accepted medical practice. Cited to support the proposition that off-label use is not per se dangerous and is a common medical practice.
Donahue v Ferolito, Vultaggio Sons, 13 AD3d 77 Example of dismissals where plaintiffs failed to allege actual harm under § 349. Cited as analogous authority for dismissal where injury was not properly alleged.
Rice v Penguin Putnam, 289 AD2d 318 Another example where failure to allege harm supported dismissal. Used as supporting authority for dismissal on similar grounds.
Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, 31 AD3d 983 Sets out elements for unjust enrichment: (1) defendant was enriched, (2) at the plaintiff's expense, and (3) inequity in permitting retention. Applied to conclude that plaintiff's unjust enrichment claim failed because she did not allege defendant held money belonging to her or that enrichment occurred at her expense.
Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415 Referenced in support of unjust enrichment principles. Cited as additional authority defining unjust enrichment elements.
Citibank, N.A. v Walker, 12 AD3d 480 Referenced in support of unjust enrichment principles. Cited for the unjust enrichment discussion and elements.
Anderson Props. v Sawhill Tubular Div., Cyclops Corp., 149 AD2d 950 Authority that a court need not sua sponte grant leave to amend when plaintiff fails to expressly request such relief. Applied to uphold Supreme Court's refusal to grant leave to amend where plaintiff did not expressly request it.
Yavorski v Dewell, 288 AD2d 545 Further support for the principle that leave to amend need not be granted sua sponte absent a request. Cited to support the court's refusal to sua sponte grant leave to amend.

Court's Reasoning and Analysis

The court proceeded stepwise:

  1. Standard of review: The court reiterated that on a CPLR 3211(a)(7) motion to dismiss the pleadings are to be liberally construed, allegations taken as true, and plaintiffs given every possible inference (EBC I, Skibinsky, 1455 Washington Ave.). The court also noted that affidavits may be considered to cure pleading defects (Leon v Martinez).
  2. Elements under GBL § 349: The court explained that a plaintiff must allege consumer-oriented deceptive acts that are "deceptive or misleading in a material way" and that the plaintiff "has been injured by reason thereof" (Oswego, Small). The court emphasized that while justifiable reliance is not required, actual harm (not necessarily pecuniary but concrete) caused by the deception must be alleged.
  3. Application to plaintiff's § 349 claim: Plaintiff's central contention — that payment for Neurontin for an off-label use constituted the requisite injury because she would not have purchased the drug absent defendant's deception — was rejected based on controlling authority (Small). The court explained that alleging only the purchase amounts to asserting deception as both act and injury and therefore does not manifest pecuniary or actual harm. The court observed plaintiff did not allege that the drug was ineffective for her neck pain or that its use adversely affected her health; her speculative assertion that off-label prescriptions were potentially dangerous was belied by authority recognizing off-label use as widespread and accepted (Buckman; Washington Legal Found.). Citing Donahue and Rice, the court concluded that absent additional allegations of harm (e.g., price inflation or adverse health effect) the § 349 claim fails.
  4. Application to unjust enrichment claim: The court set forth the unjust enrichment elements (Clifford R. Gray) and concluded plaintiff's allegations were conclusory. Plaintiff failed to allege that the physician's decision to prescribe Neurontin was influenced by defendant or that the drug was ineffective, and thus failed to allege that defendant was in possession of money belonging to plaintiff or otherwise enriched at her expense. The unjust enrichment claim therefore failed.
  5. Leave to amend: Plaintiff did not expressly request leave to amend her complaint; therefore Supreme Court did not err in refusing to grant leave sua sponte (Anderson Props.; Yavorski). The court noted the remaining arguments were rendered academic by dismissal.

Holding and Implications

Holding:

ORDER AFFIRMED. The Appellate Division affirmed the Supreme Court's order granting defendant's motion and dismissing the complaint; the dismissal was affirmed, with costs.

Implications and direct effects:

  • The plaintiff's claims under General Business Law § 349 and unjust enrichment were dismissed for failure to plead actual or pecuniary harm and failure to allege enrichment at plaintiff's expense, respectively.
  • Plaintiff's pending motions to compel discovery and for class certification were dismissed as academic given the dismissal of the complaint.
  • Plaintiff expressly abandoned her appeal as to her common-law fraud claim.
  • The court declined to grant leave to amend where no express request to amend was made.
  • The opinion relies on and applies existing precedent and statutory interpretation; it does not announce a new rule or precedent beyond applying settled law to the facts presented.

This summary is limited to and based exclusively upon the information contained in the provided opinion.

STEPHANIE BARON, on Behalf of Herself and All Others Similarly Situated, Appellant, v. PFIZER, INC., Respondent.

Mercure, J.

Plaintiff commenced this action seeking certification of a statewide class of all individuals who purchased the drug Neurontin for "off-label" uses, i.e., uses for which the drug was not approved by the Food and Drug Administration (hereinafter FDA). The Parke-Davis Division of Warner-Lambert Company, which was acquired by defendant in 2000, received approval from the FDA to market and sell Neurontin for the treatment of epilepsy. From June 1995 to April 2000, however, Warner-Lambert also engaged in a broad campaign to promote Neurontin for a variety of pain uses, psychiatric conditions such as bipolar disorder and anxiety, and for certain other unapproved uses. Following a six-year investigation of these activities, the United States Department of Justice prosecuted Warner-Lambert, which ultimately agreed to plead guilty to (1) introducing into interstate commerce a misbranded drug that did not have adequate directions on the label for the intended uses of the drug and (2) introducing an unapproved new drug into interstate commerce. Pursuant to the plea agreement and a civil settlement agreement, Warner-Lambert consented to a criminal fine of $240 million and, primarily to reimburse state and federal Medicaid programs, civil fines of $190 million.

In this action, plaintiff asserts claims sounding in fraud, violation of General Business Law § 349 and unjust enrichment based upon the fact that she was prescribed and used Neurontin for neck pain, an off-label use. Following joinder of issue but prior to class certification, defendant moved to dismiss the proposed class action complaint in its entirety pursuant to CPLR 3211 (a) (7) and 3016 (b). Supreme Court granted defendant's motion and dismissed the complaint. In addition, the court dismissed as academic plaintiff's pending motions to compel discovery and for class certification. Plaintiff appeals and we now affirm.

Plaintiff has expressly abandoned her appeal with respect to the dismissal of her common-law fraud claim.

In determining a motion to dismiss for failure to state a claim, a "court must afford the pleadings a liberal construction, take the allegations of the complaint as true and provide plaintiff the benefit of every possible inference" ( EBC I, Inc. v Goldman, Sachs Co., 5 NY3d 11, 19; see Skibinsky v State Farm Fire Cas. Co., 6 AD3d 975, 976; 1455 Washington Ave. Assoc., v Rose Kiernan, 260 AD2d 770, 771). Moreover, "a court may freely consider affidavits submitted by the plaintiff to remedy any defects in the complaint" ( Leon v Martinez, 84 NY2d 83, 88). With respect to plaintiff's claims herein, we note that to state a cause of action under General Business Law § 349, a plaintiff must allege that the defendant has engaged in consumer-oriented acts or practices that are "`deceptive or misleading in a material way and that plaintiff has been injured by reason thereof'" ( Small v Lorillard Tobacco Co., 94 NY2d 43, 55, quoting Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, 85 NY2d 20, 25 [emphasis added]; see Stutman v Chemical Bank, 95 NY2d 24, 29). That is, while an assertion of justifiable reliance is not necessary, a plaintiff must allege that defendant's consumer-oriented, deceptive acts or practices "caused actual, although not necessarily pecuniary, harm" directly to plaintiff ( Oswego Laborers' Local 214 Pension Fund v Marine Midland Bank, supra at 26; see Blue Cross Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200, 207-208; Stutman v Chemical Bank, supra at 29-30; Small v Lorillard Tobacco Co., supra at 56).

Here, the parties dispute centers on whether plaintiff adequately alleged that she suffered an injury as a result of defendant's deceptive acts. Plaintiff argues that Supreme Court erred in holding that she failed to sufficiently allege a cognizable injury when it is undisputed that she paid for Neurontin, which was prescribed by her doctor for an off-label use. Essentially, plaintiff seeks a refund of the purchase price of Neurontin on the ground that she would not have purchased the drug absent defendant's deceptive practices. The Court of Appeals, however, has rejected this very argument, i.e., "that consumers who buy a product that they would not have purchased, absent a manufacturer's deceptive commercial practices, have suffered an injury under General Business Law § 349" ( Small v Lorillard Tobacco Co., supra at 56). Without further allegations that, for example, the price of the product was inflated as a result of defendant's deception or that use of the product adversely affected plaintiff's health, plaintiff's claim "sets forth deception as both act and injury" and, thus, "contains no manifestation of either pecuniary or `actual' harm" ( id.). Indeed, we note that plaintiff failed even to allege — either in her complaint or supporting affidavit — that Neurontin was ineffective to treat her neck pain, and her claim that any off-label prescription of Neurontin was potentially dangerous both asserts a harm that is merely speculative and is belied in any event by the fact that off-label use is a widespread and accepted medical practice ( see Buckman Co. v Plaintiffs' Legal Comm., 531 US 341, 350; Washington Legal Found, v Henney, 202 F3d 331, 333). In short, because plaintiff failed to allege actual harm or that she sustained a pecuniary injury, Supreme Court properly determined that she failed to state a claim under General Business Law § 349 ( see Small v Lorillard Tobacco Co., supra at 56; Donahue v Ferolito, Vultaggio Sons, 13 AD3d 77, 78, lv denied 4 NY3d 706; Rice v Penguin Putnam, 289 AD2d 318, 319, appeal dismissed and Iv denied 98 NY2d 635).

We similarly conclude that plaintiff's unjust enrichment claim was properly dismissed. A claim for unjust enrichment will lie when "(1) the defendant was enriched, (2) at the expense of the plaintiff, and (3) . . . it would be inequitable to permit the defendant to retain that which is claimed by the plaintiff ( Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, 31 AD3d 983, 988; see Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421, cert denied 414 US 829; Citibank, N.A. v Walker, 12 AD3d 480, 481). Inasmuch as plaintiff makes only conclusory allegations that defendant's deceptive acts played a role in her use of Neurontin, without alleging that her physician's decision to prescribe the drug was influenced by defendant or that the drug was ineffective to treat her, she has failed to allege that defendant is in possession of money belonging to plaintiff and her claim was properly dismissed ( see Clifford R. Gray, Inc. v LeChase Constr. Servs., LLC, supra at 988).

Finally, inasmuch as plaintiff failed to expressly request leave to amend her complaint, Supreme Court did not err in refusing to sua sponte grant such relief ( see Anderson Props, v Sawhill Tubular Div., Cyclops Corp., 149 AD2d 950, 950-951; see also Yavorski v Dewell, 288 AD2d 545, 548). The parties' remaining arguments are rendered academic by our decision.

Ordered that the order is affirmed, with costs.

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BARON v. PFIZER
(Jul 5, 2007)