United States ex rel. Garbe v. Kmart Corp.

968 F. Supp. 2d 978, 2013 WL 5615747, 2013 U.S. Dist. LEXIS 147815
CourtDistrict Court, S.D. Illinois
DecidedSeptember 18, 2013
DocketCase No. 12-CV-0881-MJR-PMF
StatusPublished
Cited by3 cases

This text of 968 F. Supp. 2d 978 (United States ex rel. Garbe v. Kmart Corp.) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Garbe v. Kmart Corp., 968 F. Supp. 2d 978, 2013 WL 5615747, 2013 U.S. Dist. LEXIS 147815 (S.D. Ill. 2013).

Opinion

MEMORANDUM AND ORDER

REAGAN, District Judge:

Pending before the Court is Defendant Kmart Corporation’s Motion to Dismiss Relator’s Complaint for failure to state a claim (Doc. 102). In the motion, Defendant Kmart Corporation (“Kmart”) seeks to dismiss all 32 counts of the Second Amended Complaint (“SAC”), pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(6) and 9(b). Plaintiff-Relator James Garbe has filed a brief in opposition (Doc. 106). For the reasons set forth below, this motion is DENIED.

Relator has brought qui tam1 claims on behalf of the United States under the False Claims Act, 31 U.S.C. § 3729(a)(1), § 3729(a)(2), § 3729(a)(7) (Count I) (“FCA”) and the related false claims acts of twenty-six states (Counts II, IV-VIII, XI, XIII-XXXI), and four other related state statutes (Counts III, IX, X and XII).2 The Second Amended Complaint (Doc. 98) alleges that Defendant Kmart violated the False Claims Act (“FCA”), 31 U.S.C. §§ 3729(a)(1), (a)(2) and (a)(7), by misrepresenting its usual and customary drug prices on standardized claim forms and over-charging private insurers, prescription benefit managers, state Medicaid programs and certain federal programs for certain generic drugs sold at retail.3

Relevant Legal Standards

I. Pleading Standards

Defendant premises its motion upon Federal Rules of Civil Procedure 12(b)(1), 12(b)(6) and 9(b).

A motion to dismiss pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure challenges a court’s subject matter jurisdiction. “Federal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto.” Bender v. Williamsport Area School District, 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986). Therefore, the objection presented by a Rule 12(b)(1) motion challenging the Court’s subject matter jurisdiction is that the Court has no authority or competency to hear and decide the case before it. International Union of Operating Engineers Local 150, AFL-CIO v. Ward, 563 F.3d 276, 280-82 (7th Cir.2009). It is also “well settled that the failure to state a proper cause of action calls for a judgment on the [982]*982merits and not for a dismissal for want of jurisdiction.” See Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946).4

In deciding a motion to dismiss for failure to state a claim on which relief can be granted under Rule 12(b)(6), the district court’s task is to determine whether the complaint includes “enough facts to state a claim to relief that is plausible on its face.” Khorrami v. Rolince, 539 F.3d 782, 788 (7th Cir.2008), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court of Appeals for the Seventh Circuit has clarified that, even after Twombly, courts must still approach Rule 12(b)(6) motions by construing the complaint in the light most favorable to the non-moving party, accepting as true all well-pleaded facts alleged, and drawing all possible inferences in the non-moving party’s favor. Hecker v. Deere & Co., 556 F.3d 575, 580 (7th Cir.2009), cert. denied, 558 U.S. 1148, 130 S.Ct. 1141, 175 L.Ed.2d 973 (2010) (quoting Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir.2008)).

Legal conclusions and conclusory allegations that merely recite the elements of a claim are not entitled to the presumption of truth afforded to well-pled facts. See McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir.2011). Therefore, after excising the allegations not accepted as true, the Court must decide whether the remaining factual allegations plausibly suggest entitlement to relief. Id. In other words, the complaint must contain allegations plausibly suggesting — not merely consistent with — an entitlement to relief. Id. (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955). This determination is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” McCauley, 671 F.3d at 616 (citing Ashcroft v. Iqbal, 556 U.S. 662, 663-64, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)).

Federal Rule of Civil Procedure 9(b) requires an elevated pleading standard for fraud claims, such as the claims asserted in this action. “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b) (emphasis added). See also Tricontinental Industries, Ltd. v. Pricewaterhouse-Coopers, LLP, 475 F.3d 824, 833 (7th Cir.2007). Rule 9 is aimed at: “(1) protecting a defendant’s reputation from harm; (2) minimizing ‘strike suits’ and ‘fishing expeditions;’ and (3) providing notice of the claim to the adverse party.” Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir.1994). The Court of Appeals for the Seventh Circuit has explained that the complaint must plead “who, what, when, where, and how.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 569 (7th Cir.2012) (citing Windy City Metal Fabricators & Supply, Inc. v. CIT Technology Financing Services, Inc., 536 F.3d 663, 668 (7th Cir.2008)); United States ex rel. Gross v. AIDS Research Alliance-Chicago, 415 F.3d 601, 605 (7th Cir.2005). With that said, Rule 9(b) does not require a relator to plead evidence and is to be read in conjunction with Federal Rule of Civil Procedure 8, which requires a short and plain statement of the claim. See Tomera v. Galt, 511 F.2d 504, 508 (7th Cir.1975).

II. The False Claims Act Standard

Under the federal FCA, “private individuals ... referred to as ‘relators,’ may file civil actions known as qui tarn actions on behalf of the United States to recover money that the government paid as a result of conduct forbidden under [the False Claims] Act.” United States ex rel. [983]*983Yannacopoulos v. Gen. Dynamics,

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968 F. Supp. 2d 978, 2013 WL 5615747, 2013 U.S. Dist. LEXIS 147815, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-garbe-v-kmart-corp-ilsd-2013.