UFCW Local 1776 v. Eli Lilly & Co., No. 09-0222 - U.S. Second Circuit
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UFCW Local 1776 v. Eli Lilly & Co., No. 09-0222

In UFCW Local 1776 v. Eli Lilly & Co., No. 09-0222, a putative class action against Eli Lilly, manufacturer of the drug Zyprexa, asserting a civil RICO violation predicated on mail fraud, conspiracy to violate RICO, violation of state consumer protection laws, common-law fraud, and unjust enrichment based on Lilly's alleged misrepresentations about Zyprexa's efficacy and safety, the court vacated the certification of a class and denial of summary judgment, holding that 1) because plaintiffs' excess price theory was not susceptible to generalized proof with respect to either but-for or proximate causation, class certification based on this theory was an abuse of discretion; and 2) the district court did not consider individual claims under plaintiffs' quantity effect theory when it ruled on Lilly's motion for summary judgment.

As the court wrote:  "Plaintiffs-appellees ("plaintiffs"), unions and insurers who act as third-party payors ("TPPs") who underwrite the purchase of prescription drugs by their members or insureds, brought this putative class action against Eli Lilly and Company ("Lilly"), manufacturer of the drug Zyprexa, alleging that Lilly had misrepresented Zyprexa's efficacy and side effects to physicians. The putative class is composed of TPPs, such as insurance providers, that paid for Zyprexa prescriptions. Plaintiffs argued that class members were injured in two ways:  first, by paying for Zyprexa prescriptions that would not have been issued but for the alleged misrepresentations; and second, by paying a higher price for Zyprexa than would have been charged absent the alleged misrepresentations. The district court certified a class of TPPs under the second theory. This appeal followed."

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