Court Rejects Forest RICO Suit

Attorney Lindsay Breedlove (Pepper Hamilton) says that a Massachusetts federal court rejected efforts by a union to certify a class action against Forest Laboratories under the Racketeer Influenced and Corrupt Organization Act (RICO). In a Washington Legal Foundation Legal Opinion Letter, Breedlove writes that although the court found that the case fell into a small subset of instances where “reliance” does not matter, it found that even if reliance issues did not prevent certification, proceeding on a class-wide basis was inappropriate because common issues did not predominate with regard to but-for causation, injury, and damages.

The suit was one of many brought against Forest across the country alleging that the company misrepresented the efficacy of its antidepressants Celexa and Lexapro in treating pediatric patients with major depressive disorder. Those who brought the suits argued for treble damages under RICO for the economic harm they allegedly suffered when they purchased or paid for prescriptions that would not otherwise have been written.

Breedlove says the court reviewed the arguments that the Painters & Allied Trades District Council 82 Health Care Fund intended to use to satisfy each element of its RICO claim. Although Forest was not able to defeat certification on proximate-cause grounds, it persuaded the court that the union had not met its burden of proof for but-for causation. The court also ruled that the union’s arguments about injury were unpersuasive. The union said that it suffered economic harm because it paid for prescriptions that would not have been written if Forest had not engaged in allegedly fraudulent marketing on the drugs’ efficacy for pediatric patients. Because studies on Celexa and Lexapro pediatric efficacy were equivocal, the court said, efficacy issues would “likely require individualized assessment of the utility of Celexa and/or Lexapro for each patient based upon his or her particular medical circumstances.”

“The Celexa and Lexapro court embraced the importance of evaluating predominance by carefully analyzing the evidence Painters intended to use to support each element of its claim, showing a willingness to explore the common class-certification concerns based on the specific facts of the case,” Breedlove concludes. “The court’s analysis should serve as a model for other courts facing motions to certify classes in both RICO cases and cases that raise similarly complex liability and damages theories.”