Eli Lilly and Company v. Mochi Health Corp., et al.

Background

Eli Lilly and Company sued Mochi Health Corp., Mochi Medical CA, P.C., Mochi Medical P.A., Aequita Pharmacy LLC, and Aequita Corporation. Lilly alleged that the defendants participated in a scheme to mislead consumers into purchasing knockoff versions of Lilly’s FDA-approved MOUNJARO® and ZEPBOUND® medications.

The court had previously dismissed Lilly’s civil-conspiracy allegations because Lilly had not plausibly alleged more than the defendants’ association with one another. Lilly then filed a Second Amended Complaint expanding its conspiracy allegations. The defendants again moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legally valid claim.

Civil-Conspiracy Standard

The court explained that, under California law, civil conspiracy is not an independent claim. Instead, it is a legal theory that can make one person responsible for another conspirator’s tort. Lilly had to plausibly allege the formation and operation of a conspiracy, wrongful conduct advancing the conspiracy, and damages caused by that conduct. The alleged conspirators also had to know about the planned wrongdoing and intend to help carry it out.

California Unfair Competition Law Conspiracy

The court held that Lilly plausibly alleged that the Aequita defendants participated in a conspiracy involving the corporate practice of medicine in violation of California’s Unfair Competition Law. The court relied on allegations that Myra Ahmad exercised significant control over Aequita’s prescription-filling procedures, that she and Abraham Chaibi had a close relationship and allegedly controlled the pharmacy operations, and that Aequita had financial incentives connected to the alleged scheme.

The court also considered allegations that Aequita filled large numbers of identical prescriptions, followed directions from Ms. Ahmad, and adopted practices that allegedly increased profits across the defendants’ entities. Taking Lilly’s allegations as true and drawing reasonable inferences in Lilly’s favor, the court found that Lilly plausibly alleged Aequita knew about and helped advance the alleged scheme. The court therefore denied the motion as to Lilly’s civil-conspiracy claim against the Aequita defendants under the California Unfair Competition Law.

Federal False-Advertising Conspiracy

The court reached a different conclusion about Lilly’s theory that the Mochi Medical defendants and the Aequita defendants conspired to violate the Lanham Act, the federal law that includes a false-advertising claim.

As to the Mochi Medical defendants, the court held that allegations about increasing tirzepatide revenue, the defendants’ leadership relationships, and an agreement allowing Mochi Medical to provide advertising services did not plausibly show a wrongful act advancing a false-advertising conspiracy. Increasing revenue is not itself a tort, and allegations showing knowledge or relationships were not enough to show participation in conduct that furthered the alleged false advertising.

As to the Aequita defendants, the court found that Lilly had not plausibly alleged an act advancing the false-advertising objective. Although Lilly alleged that Aequita participated in a co-branded announcement with Mochi Health stating that the defendants provided “custom-made formulations,” the complaint did not explain Aequita’s role in distributing the announcement or creating its content beyond having its name appear in the announcement. The court stated that knowledge of alleged false advertising, without an act intended to help carry it out, was insufficient.

Disposition

The court granted in part and denied in part the defendants’ motion to dismiss the Second Amended Complaint. It granted the motion as to Lilly’s civil-conspiracy claims against the Mochi Medical and Aequita defendants for violating the Lanham Act. Because Lilly had already received two opportunities to amend and the court found further amendment futile, the court granted that part without leave to amend. The court also stated that the dismissal was without prejudice to Lilly moving to amend if it later discovers facts supporting a Lanham Act conspiracy.

The court denied the motion as to Lilly’s civil-conspiracy claim against the Aequita defendants for violating California’s Unfair Competition Law. The order disposed of Docket No. 139.