State v. Bayer Pharmaceuticals Corp.
| Docket Number: | 2008-CA-01659-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 04-15-2010 Opinion Author: Kitchens, J. Holding: Reversed and remanded |
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| Additional Case Information: |
Topic: Fraud - Pleading requirements - M.R.C.P. 9(b) - M.R.C.P. 12(b)(6) - Settlement agreement - Conversion to summary judgment - M.R.C.P. 56 Judge(s) Concurring: Carlson and Graves, P.JJ., Randolph, Lamar, Chandler and Pierce, JJ. Concur in Part, Concur in Result 1: Waller, C.J., with separate written opinion. Concur in Part, Concur in Result Joined By 1: Dickinson, J. Procedural History: Bench Trial; Dismissal Nature of the Case: CIVIL - OTHER |
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| Trial Court: |
Date of Trial Judgment: 08-29-2008 Appealed from: Hinds County Chancery Court Judge: William H. Singletary Disposition: After investigating the State’s claim, two special masters appointed by the trial court concluded that a 2001 Settlement Agreement between the State and Bayer made Bayer unique among the defendants, and that because the State had failed to plead around the 2001 Settlement Agreement, its claims against Bayer should be dismissed pursuant to Rules 12(b)(6) and 9(b) of the Mississippi Rules of Civil Procedure. Following the special masters’ recommendation to dismiss for failure to state a claim upon which relief can be granted, the chancellor dismissed with prejudice the State’s claims against Bayer. Case Number: G-2005-2021S/2 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | State of Mississippi |
D. RONNIE MUSGROVE, J. LERAY McNAMARA, FRANK KOLB, GEORGE W. NEVILLE, WILSON DANIEL “DEE” MILES, III, ANDY LOWRY |
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| Appellee: | Bayer Corporation, Bayer Pharmaceuticals Corporation and Bayer Healthcare, LLC | MICHAEL P. DOSS, WILLIAM F. GOODMAN, III, STEVEN D. ORLANSKY, RICHARD D. RASKIN | ||
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| Topic: | Fraud - Pleading requirements - M.R.C.P. 9(b) - M.R.C.P. 12(b)(6) - Settlement agreement - Conversion to summary judgment - M.R.C.P. 56 |
| Summary of the Facts: | The State of Mississippi filed suit in chancery court against more than eighty pharmaceutical manufacturers, including Bayer Corporation, Bayer Pharmaceuticals Corporation, and Bayer Healthcare, LLC. The State alleged that each of the defendants had fraudulently misrepresented the average wholesale prices of drugs provided to beneficiaries of the Mississippi Medicaid program, causing the State to overpay drug providers. After investigating the State’s claim, two special masters appointed by the trial court concluded that a 2001 Settlement Agreement between the State and Bayer made Bayer unique among the defendants, and that because the State had failed to plead around the 2001 Settlement Agreement, its claims against Bayer should be dismissed pursuant to M.R.C.P. 12(b)(6) and 9(b). Following the special masters’ recommendation, the chancellor dismissed with prejudice the State’s claims against Bayer. The State appeals. |
| Summary of Opinion Analysis: | Issue 1: Fraud M.R.C.P. 9(b) sets forth the pleading requirements when fraud is alleged. If a plaintiff’s complaint does not comply with the particularity requirements of Rule 9(b), the complaint should not survive a motion to dismiss for failure to state a claim under M.R.C.P. 12(b)(6). Fraud will not be inferred or presumed and may not be charged in general terms. The circumstances of the alleged fraud such as the time, place and contents of any false representations or conduct must be stated. The elements of fraud include: a representation; its falsity; its materiality; the speaker’s knowledge of its falsity or ignorance of its truth; the speaker’s intent that the representation should be acted upon by the hearer and in the manner reasonably contemplated; the hearer’s ignorance of its falsity; the hearer’s reliance on the representation’s truth; the hearer’s right to rely thereon; and the hearer’s consequent and proximate injury. In this case, the State’s amended complaint asserts a knowing, material, and false representation by Bayer with the purpose of deceiving the State, and that the State’s reliance on Bayer’s representation proximately caused the State’s injury. The complaint meets the specificity requirements of Rule 9(b), and Bayer does not dispute that without the settlement agreement, the amended complaint would have been pled sufficiently against the named Bayer defendants, as it was for each and all of the other defendants. Issue 2: Settlement agreement Bayer argues that a trial court may consider matters outside the pleadings when ruling on a Rule 12(b)(6) motion. A primary purpose for limiting the review of a Rule 12(b)(6) motion to the face of the complaint is that considering matters outside the pleadings might deprive the plaintiffs of adequate notice of an affirmative defense, Here, the trial court considered matters outside the pleadings when it took into account the 2001 Settlement Agreement. Having done so, the trial court was required to convert Bayer’s Rule 12(b)(6) motion into a Rule 56 motion for summary judgment. The record shows that the trial court failed to do so, depriving the State of actual notice of its intent to rule on the matter as a motion for summary judgment. |
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