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Robert W. Ray James S. O'Brien, Jr. Benjamin Akley PRYOR CASHMAN LLP Attorneys for Plaintiff 7 Times Square New York, New York 10036-6569 (212) 421-4100
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
ORAL CANCER PREVENTION INTERNATIONAL, INC.,
Plaintiff,
v.
JOHNSON & JOHNSON and JOHNSON & JOHNSON CONSUMER COMPANIES, INC.,
CIVIL ACTION NO.:
COMPLAINT AND JURY DEMAND
Defendants.
Plaintiff Oral Cancer Prevention International, Inc. ("OCPI"), by and through its counsel,
Pryor Cashman LLP, as and for its complaint against defendants Johnson & Johnson ("J&J") and
Johnson & Johnson Consumer Companies, Inc. ("JJCCI" and, together, "Johnson & Johnson"),
alleges as follows:
NATURE OF THE ACTION
1. Johnson & Johnson tortiously interfered with a February 5, 2010 Sales Services
Agreement (the "Sales Agreement") between OCPI and OraPharma, Inc. ("OraPharma") pursuant to
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which OraPharma obtained the exclusive right to sell OCPI's proven oral cancer prevention protocol
to dentists in the United States. Johnson & Johnson induced OraPharma to breach the Sales
Agreement to suppress sales of and withhold from the public a proven life-saving oral cancer
prevention product in order to protect sales of its mouthwash, Listerine, which has been linked to
oral cancer. The effect of that behavior, based on OraPharma's projections, is that an estimated 584
cases of otherwise preventable oral cancer in the State of New Jersey and 7,300 such cases
throughout the U.S. will occur over the term of the Sales Agreement. The number of deaths that will
result from that conduct is unknown.
THE PARTIES
2. OCPI is a Delaware corporation with its principal place of business at Two
Executive Boulevard, Suffern, New York 10901.
3. Upon information and belief, defendant J&J is a New Jersey corporation with its
principal place of business in New Brunswick, New Jersey.
4. Upon information and belief, defendant JJCCI is a New Jersey corporation with its
principal place of business in Skillman, New Jersey.
JURISDICTION AND VENUE
5. The Court has jurisdiction of this action pursuant to 28 U.S.C. §1332(a) because
the amount in controversy exceeds $75,000, exclusive of interest and costs, and is between a
Delaware corporation and citizens of a different state, New Jersey.
6. Venue is proper in this District pursuant to 28 U.S.C. §1391 because defendants
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are found in this District and significant acts giving rise to OCPI' s claims took place in this
District.
BACKGROUND
ORAL CANCER HISTORICALLY HAS BEEN DETECTED ONLY AT A LATE STAGE, WHEN SURVIVAL IS UNLIKELY
7. Oral cancer kills approximately as many people in the United States as melanoma
(skin cancer) and twice as many as cervical cancer and is about as common as all forms of leukemia
combined. It is one of the largest sources of cancer throughout Asia and is the single largest cause of
cancer deaths in India. In both the United States and Europe, oral cancer is rising sharply among
women, young people, and nonsmokers. More than 25% of U.S. oral cancer victims do not use
tobacco or abuse alcohol and have no other known risk factors. The high mortality rate for oral
cancer has not decreased over the past forty years primarily because there has been no simple test for
oral precancer and early oral cancer and, thus, this cancer historically has typically been detected
only at a late stage, when the survival rate is low.
8. Oral cancer typically starts as a small precancerous white or red spot in the mouth.
If detected at that early stage, the precancerous spot can be surgically removed and cancer is
prevented. The problem for the dentist is that such spots are extremely common, appearing in
approximately 10% of adults, and they typically are harmless.
9. While those spots most times are harmless, they contain precancerous (dysplastic)
cells in approximately 4% of cases and in approximately 20% of those cases the dysplastic cells
will develop into cancer if not removed.
10. Historically, the only proven testing protocol that could differentiate the 4% of oral
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spots that are precancerous from the 96% that are benign was a surgical biopsy, a painful and
invasive procedure which, because of the trauma involved, is not used routinely but typically is
reserved for those advanced cases where cancer is strongly suspected, making that procedure a
particularly poor cancer prevention protocol.
OCPI'S PATENTED TESTING PROTOCOL PREVENTS CANCER AND SAVES LIVES
11. OCPI' s patented testing protocol, the OralCDx Brush Test, has made oral cancer a
potentially preventable disease.
12. The OralCDx Brush Test is a quick, painless, and inexpensive test that can prevent
oral cancer by identifying dysplastic cells in the mouth long before they turn cancerous. The
OralCDx Brush Test already has been demonstrated to save lives.
13. The OralCDx Brush Test consists of a patented brush that is used to collect cells from
the suspect site quickly and painlessly, which are then analyzed by OCPI's laboratories.
14. The OralCDx Brush Test has been recommended by the American Dental
Association ("ADA") and is the only clinically proven test for the painless early detection of
precancerous oral tissue at a stage when lives can be saved. In fact, before OCPI executed the Sales
Agreement, the ADA joined a three-year public service advertising campaign, placing ads on New
York City buses and subways to boost public awareness of oral cancer and to highlight the critical
role of the OralCDx Brush Test in preventative pre-cancer screening and detection. See Exhibit 1.
15. OralCDx is the only oral cancer screening product that the ADA has publicly
recommended and to which it has lent its name. See Exhibit 2.
16. The key to saving lives -- and to OCPI's business -- is the ability to reach and train
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dentists to identify oral spots or lesions that should be tested with the OralCDx BrushTest and to
train the office staff in how to explain the importance of the test to their patients so that it can
become a routine screening tool to prevent cancer from developing.
17. A well-trained and effective sales force with a close relationship with the dental
market is essential to the success of the OralCDx Brush Test's becoming a routine part of dental
care.
18. In 2008 and 2009, OCPI had a four-person sales team, whose efforts generated in
excess of two thousand laboratory tests per month.
ORAPHARMA'S SALES TEAM HAD ACCESS TO THOSE DENTISTS ACROSS THE COUNTRY WHO WERE MOST LIKELY TO INTRODUCE ORALCDX
19. At the time that it executed the Sales Agreement, OraPharma was a wholly owned
subsidiary of J&J.
20. Upon information and belief, J&J sold OraPharma in December 2010 to Water
Street Healthcare Partners, a private equity firm in Chicago.
21. At all relevant times herein, OraPharma was reputed to have the most expertly
trained and well-managed sales force in the dental industry, with over one hundred sales
representatives.
22. By virtue of its large, well trained sales force, OraPharma had access to those
dentists and dental practices that were most likely to introduce OralCDx.
23. At all relevant times herein, OraPharma's primary product was Arestin, a locally
administered antibiotic applied by dentists to treat periodontal disease.
24. By 2010, OraPharma's sales representatives were selling Arestin to approximately
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50,000 dentists, with 20,000 of those dentists making 80% of the purchases.
25. Upon information and belief, sales of Arestin in 2010 generated approximately $90
million in revenue for OraPharma.
26. OraPharma's sales representatives "detail" Arestin to dentists, meaning that each
Arestin salesperson has detailed knowledge of all information concerning that product including
studies, test results, and proper usages.
27. The OraPharma salespeople also detailed Listerine to the dentists on whom they
called, in an effort to get the dentists to recommend it to their customers.
28. Listerine is an immensely important product to Johnson & Johnson, with annual
sales in the United States reported to be in excess of $1 billion.
29. Commencing in December 2008 and continuing throughout 2009, OraPharma's
president, Russ Sector, lobbied OCPI to become the exclusive sales representative for OralCDx,
emphasizing the specialized experience that OraPharma's sales representatives had in educating
dentists on treating oral soft tissue, noting that Arestin, Listerine and OralCDx all deal primarily
with oral soft tissue.
30. Sector told OCPI that the dentists with whom OraPharma's sales representatives had
developed their best sales relationships would be the dentists most likely to introduce OralCDx into
their practices and that based upon OraPharma's market testing with its top Arestin/Listerine
customers, he was optimistic that sales of OralCDx could far surpass those of Arestin. Indeed,
OraPharma's sales projections indicated that selling OralCDx would double OraPharma's revenues.
31. By December 2009, OCPI and OraPharma had reached an understanding on the
final terms of an agreement pursuant to which OraPharma was to receive the exclusive right to
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market OralCDx.
32. Word of that pending agreement spread in the dental industry; the pairing of the
dental industry's leading sales force with the only proven oral cancer prevention product
promoted by the American Dental Association was a significant and widely anticipated event in
the dental industry.
33. On the evening of December 16, 2009, however, when OCPI was told to stand by
to receive the signed agreement at OraPharma's instructions, OCPI was suddenly informed that
the Listerine division of J&J, which had just learned of the imminent signing of the agreement
with OCPI, had prevailed upon J&J management to direct OraPharma to not execute it.
LISTERINE IS LINKED TO ORAL CANCER
34. James Murphy, Vice-President of J&J's Consumer Products Division ("Murphy"),
told OCPI CEO Mark Rutenberg ("Rutenberg") that J&J was extremely concerned about the
implications of a study published in Australia that linked oral cancer to mouthwashes with a high
alcohol content.
35. That study, by Professor Michael McCollough and Dr. Camile Farah, published in
the Dental Journal of Australia in 2008, linked mouthwashes containing high levels of alcohol to
an increased risk of oral cancer, and recommended that such mouthwashes be restricted to short
term medical use or replaced with alcohol-free versions. Upon information and belief, Listerine
has the highest alcohol content of any over the counter mouthwash. See Exhibit 3.
36. Upon information and belief, sales of Listerine in Australia dropped by
approximately 50% following the release of the Australian study.
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37. Murphy told Rutenberg that Johnson & Johnson was leery of highlighting the risk of
oral cancer and was worried that if OraPharma were to sell both Listerine and OralCDx, it would
lend credence to the link between Listerine and oral cancer and could be construed as a tacit
acknowledgment by Johnson & Johnson of the validity of the conclusions of the Australian oral
cancer study.
JOHNSON & JOHNSON LAUNCHES ALCOHOL-FREE
"LISTERINE ZERO" TO ADDRESS THE ORAL CANCER LINKAGE
38. What Johnson & Johnson failed to disclose to OCPI -- and what OCPI did not learn
until discovering it in a store six months after entering the Sales Contract -- was that as a result of the
2008 Australian study, Johnson & Johnson secretly had been planning during 2009 to launch a new
alcohol-free mouthwash called "Listerine Zero" and was concerned that a nearly simultaneous sales
launch by OraPharma of Listerine Zero and the OralCDx Brush Test could lead to professional and
public awareness of the true oral cancer motivation behind Listerine Zero and thus depress sales of
the other versions of Listerine.
39. Upon information and belief, Listerine Zero was developed and introduced by
Johnson & Johnson primarily as an alternative Listerine product that would preserve the Listerine
brand and its substantial revenues in the event ordinary Listerine were to suffer from a public
perception linking mouthwashes containing alcohol to oral cancer.
40. Listerine Zero was carefully branded to conceal the fact that it was developed
primarily in response to the Australian mouthwash oral cancer study and the subsequent sales drop
in Listerine's Australian sales. The advertising for that product makes no mention of the fact that it
may reduce the risks associated with mouthwashes containing alcohol and instead emphasizes only
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its "less intense" flavor. See Exhibit 4.
41. Although Johnson & Johnson forced OraPharma to hold off executing the Sales
Agreement, news of its anticipated signing already had generated widespread interest in the dental
industry.
42. In early February 2010, Murphy contacted Rutenberg to inform him that Johnson &
Johnson's upper management had decided to allow OraPharma to execute the sales agreement partly
because Johnson & Johnson's management realized that in light of the widespread anticipation of the
Sales Agreement by the dental industry, Johnson & Johnson's blocking OraPharma's execution of
the Sales Agreement would generate exactly the publicity regarding the oral cancer risk of Listerine
that Johnson & Johnson sought to avoid.
43. Although Murphy requested that the Sales Agreement be modified to reflect a phased
roll out of OralCDx to test its effect on Listerine sales, OCPI declined that request and Johnson &
Johnson agreed that OraPharma would be allowed to exercise its required diligent efforts to sell
OralCDx through all of its dental salespeople to all of its dentist customers following a short sales
training period not to exceed four months from execution of the Agreement. That representation was
false.
44. OraPharma and OCPI executed the Sales Agreement on February 5, 2010
45. By email dated March 11, 2010, Murphy informed Rutenberg that the OraPharma
sales training period had been completed to its satisfaction and that OraPharma would therefore
launch its OralCDx sales efforts on March 15, 2010. That statement was false.
JOHNSON & JOHNSON CAUSES ORAPHARMA TO BREACH THE SALES AGREEMENT
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46. Upon information and belief, Johnson & Johnson never had any intention of allowing
OraPharma to sell OralCDx to those dentists most likely to adopt its use in their practices, but only
allowed OraPharma to enter into the Sales Agreement as a means to control and suppress sales of
OralCDx to those dentists who J&J considered most likely to recommend the use of Listerine
mouthwash to their patients, thereby depriving the public of a known cancer prevention product and
destroying OCPI's dental business.
47. As required by the Sales Agreement, OraPharma forwarded to OCPI in March
2010 a detailed sales forecast, of its future sales of OralCDx, consisting of low end' and 'high
end' projections, which OraPharma created based on surveys of their best customers, i.e. those
OraPharma customers they knew to be most likely to purchase Arestin and recommend a
mouthwash to their patients.
48. Those projections stated that OraPharma "plans on committing its 100+ person
national sales force to the sales of OCPI's OralCDx product."
49. OraPharma's low-end projections called for one-third of all dentists to whom
OralCDx was marketed to become users of this product within a six month period, with an
average testing rate of 6.6 tests per adopting dentist per month, with more than ninety-eight
thousand tests to be performed within the first year of the Agreement and more than four hundred
and thirty-eight thousand tests to be performed during the second year.
50. Based upon its low-end projections, OraPharma insisted that the OCPI laboratories be
prepared to handle at least 20,000 tests per month within six months of signing the Agreement.
51. In reliance on Johnson & Johnson's representations that it would allow OraPharma to
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use its entire sales force to market OralCDx to its top dentist customers and in response to its
demand that OCPI increase its laboratories' testing capacities, OCPI raised over $5M in both debt
and equity and spent more than $2 million to purchase laboratory equipment and to hire and train
new doctors and employees to handle the minimum of 20,000 tests/month it was told to anticipate
52. After executing the Sales Agreement, OraPharma insisted, as the exclusive dental
sales agent, that OCPI not only terminate its own sales force but also terminate all of its existing
distributor relationships for the OralCDx test kit.
53. In reliance on Johnson & Johnson's representations that it would allow OraPharma to
use its entire sales force to market OralCDx to its top dentist customers, OCPI acceded to
OraPharma's demand, laid off its own sales force, and terminated its arrangements with third parties
for the distribution of the OralCDx Brush Test kit, which had generated substantial revenue,
effectively making OCPI entirely dependent upon OraPharma to market and sell the OralCDx
protocol.
54. Shortly after the Sales Agreement was executed, however, OraPharma informed
OCPI that Johnson & Johnson had instructed it to market OralCDx to only a minute percentage of its
dentist customers and, more importantly, only to those dentists who were the least likely to purchase
and use OralCDx: dentists whose practices were oriented toward providing the most basic dental
services, with little or no attention to broader soft tissue care.
55. Johnson & Johnson prohibited OraPharma's sales people from attempting to sell
OralCDx to any dentists not on the pre-selected list, and required OraPharma to inform them that
that they would receive no commission for selling OralCDx to dentists other than those pre-selected
dentists and, in fact, would be disciplined or fired for selling OralCDx to any dentists not on the list.
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56. Johnson & Johnson's scheme to take control of OralCDx and prevent it from
becoming part of routine screening throughout the U.S. succeeded. By June 2010, OraPharma's one
hundred plus member sales team, with access to over 50,000 dentists, had made fewer than 50% of
the sales that OCPI' s four-person sales team had made in the six months preceding the Sales
Agreement.
57. Johnson & Johnson's scheme to prevent OralCDx from becoming part of routine
screening throughout the U.S. is demonstrated by the fact that the majority of OralCDx laboratory
tests that took place subsequent to signing the Sales Agreement were so-called legacy sales from
previous dental clients and were not attributable in any way to OraPharma.
58. At an OraPharma Northeast regional sales meeting in August 2010, six months after
executing the Sales Agreement, OraPharma president Russ Sector told Rutenberg that Johnson &
Johnson still objected to expanding the marketing of OralCDx beyond the limited preselected list of
dentists least likely to adopt the product.
59. OraPharma informed OCPI in or about December 2010 that an agreement had been
reached for J&J to sell OraPharma to Water Street Healthcare Partners, a private equity firm located
in Chicago.
60. At OraPharma's national sales meeting in January 2011, OraPharma's new CEO told
Rutenberg that OraPharma was still required to sell Listerine pursuant to Johnson & Johnson's
directions and OraPharma continued to limit sales of OralCDx to a small number of Dentists who
were least likely to introduce OralCDx into their practices, at Johnson& Johnson's direction. A few
weeks later OraPharma terminated the Sales Agreement.
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FIRST COUNT
(Fraud)
61. OCPI incorporates by reference the allegations contained in paragraphs 1 through
59 of this Complaint.
62. Johnson & Johnson represented that they would allow OraPharma to employ its
full sales force to access all of OraPharma's dentist customers and, more particularly, that they
would allow OraPharma to market OralCDx to those dentists who were most likely to employ the
OralCDx Brush Test as a routine screening regimen.
63. That representation was untrue when made and Johnson & Johnson knew it to be
false when they made it.
64. Johnson & Johnson made that misrepresentation in order to induce OCPI to enter
into the Sales Agreement.
65. OCPI reasonably relied on Johnson & Johnson's misrepresentations and suffered
damages thereby in an amount to be determined at trial, which amount is not less than $60
million.
66. In carrying out its fraud, Johnson & Johnson acted willfully and with an evil
purpose, warranting punitive damages in the amount of $10 million.
SECOND COUNT
(Tortious Interference With Contract)
67. OCPI incorporates by reference the allegations contained in paragraphs 1 through
66 of this Complaint.
68. OCPI and OraPharma were parties to the Sales Agreement.
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69. Johnson & Johnson was fully aware of the existence of the Sales Agreement.
70. Johnson & Johnson intentionally caused OraPharma to breach the Sales
Agreement.
71. Johnson & Johnson's conduct was directly contrary to OraPharma's economic
interest.
72. Johnson & Johnson acted maliciously, fraudulently, and without justification.
73. As a result of Johnson & Johnson's tortious interference with contract, OCPI has
been damaged in an amount to be determined at trial, which amount is not less than $60 million.
74. In tortiously interfering with the Sales Agreement, Johnson & Johnson acted
willfully and with an evil purpose, warranting punitive damages in the amount of $10 million.
THIRD COUNT (Civil Conspiracy)
75. OCPI incorporates by reference the allegations contained in paragraphs 1 through
74 of this Complaint.
76. J&J and JJCCI conspired with each other to defraud OCPI.
77. J&J and JJCCI, and each of them, pursuant to their scheme and in furtherance of
their objective, fraudulently induced OCPI to enter into the Sales Agreement.
78. As a result of Johnson & Johnson's civil conspiracy, OCPI has been damaged in an
amount to be determined at trial, which amount is not less than $60 million.
79. In conspiring to defraud OCPI, Johnson & Johnson acted willfully and with an evil
purpose, warranting punitive damages in the amount of $10 million.
WHEREFORE plaintiff Oral Cancer Prevention International, Inc. demands
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judgment against Johnson & Johnson as follows:
A. With respect to the FIRST COUNT, damages in an amount to be determined
at trial but not less than $60 million, plus punitive damages of $10 million;
B. With respect to the SECOND COUNT, damages in an amount to be
determined at trial but not less than $60 million, plus punitive damages of $10 million;
C. With respect to the THIRD COUNT, damages in an amount to be determined
at trial but not less than $60 million, plus punitive damages of $10 million; and
for such other and further relief as the Court may deem just and proper.
Dated: New York, NY July 6, 2011
PRYOR CASHMAN LLP
/s/: Robert W. Ray rray@pryorcashman.com
7 Times Square New York, NY 10036-6569 (212) 421-4100
Attorneys for Oral Cancer
Prevention International, Inc.
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CERTIFICATION PURSUANT TO L. CIV. R. 11.2
I certify that, to the best of my knowledge, this matter is not the subject of any other
action pending in any court or of any pending arbitration or administrative proceeding.
Dated: July 6, 2011 PRYOR CASHMAN LLP Attorneys for Plaintiff
/s/: Robert W. Ray rray@pryorcashman.com
7 Times Square New York, NY 10036-6569 Telephone: (212) 421-4100 Facsimile: (212) 326-0806
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