Commerce Benefits Group, Inc. v. McKesson Corp.

326 F. App'x 369
CourtCourt of Appeals for the Sixth Circuit
DecidedMay 20, 2009
DocketNo. 08-3857
StatusPublished

This text of 326 F. App'x 369 (Commerce Benefits Group, Inc. v. McKesson Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Commerce Benefits Group, Inc. v. McKesson Corp., 326 F. App'x 369 (6th Cir. 2009).

Opinion

OPINION

McKEAGUE, Circuit Judge.

This diversity case involves a business relationship gone sour. In September 2006, employees of Commerce Benefits Group (“CBG”) and Per-Se Technologies, Inc. (“Per-Se”) met and discussed the possibility of jointly marketing and promoting services to hospitals relating to a federal prescription drug pricing program. They left the meeting optimistic about the business initiative, and they began making sales calls together. But the relationship became strained soon after McKesson Corporation (“McKesson”) acquired Per-Se in early 2007. Although CBG sought to formalize the relationship, McKesson continued to delay and directed CBG not to make any sales calls on its behalf until a formal agreement was reached.

Eventually, CBG sued McKesson in Ohio state court, alleging breach of contract, promissory estoppel, and other state law claims. McKesson removed the case to federal district court in Ohio. After permitting CBG to add Per-Se as a party defendant, the district court granted summary judgment to McKesson and Per-Se (collectively, “defendants”) on all claims. On appeal, CBG argues that the district court improperly granted summary judgment to defendants on its promissory es-toppel claim and erred in several procedural rulings. We AFFIRM.

I

A. Factual Background

McKesson is a large corporate distributor of prescription drugs. Per-Se manages revenue cycles and other pharmaceutical program services in the health care industry. CBG is a third-party administrator that manages employer benefit plans. CBG provided health plan administration services to Per-Se until McKesson acquired Per-Se in January 2007.

In September 2006, the Chief Executive Officer of Per-Se, Phil Pead, and the Chief Executive Officer of CBG, Tom Patton, set up a meeting at CBG’s corporate headquarters in Avon Lake, Ohio, to discuss possible business initiatives and opportunities for the two companies (the “Avon Lake meeting”).1 Patton represented CBG at the meeting, while Phil Jordan, the Chief Product Officer of Per-Se, led the contingent of Per-Se employees.

[372]*372One of the initiatives the parties discussed at the Avon Lake meeting involved the so-called “340B program,” a federal prescription drug pricing program that enables certain health care systems that serve a disproportionately large number of indigent patients (“Disproportionate Share Hospitals” or “DSH Facilities”) to obtain prescription drugs at deeply discounted prices. See Veteran’s Health Care Act of 1992, Pub.L. No. 102-585, § 603, 106 Stat. 4944, 4967-73 (1992) (codified at 42 U.S.C. § 256b). Patton discussed his idea for marketing a 340B inventory management program to hospital system clients (the “340B initiative”). Specifically, Patton proposed that CBG would counsel hospitals on ways to use health care plans that would drive their own employees back into the hospital for prescription drug treatment, which would generate more 340B-eligible prescriptions. Per-Se would use its technology and service offerings to handle inventory management and otherwise provide 340B support. By expanding the number of doctors and patients eligible to participate in the 340B program, the idea was that hospitals would realize a significant savings and would pay CBG and Per-Se a portion of that savings as a fee.

The parties discussed but did not reach an agreement as to the income split for the 340B initiative. They left the Avon Lake meeting, however, with an understanding that they would “cooperatively sell the first few deals.” CBG would use its affiliated brokers to gain an audience with hospitals. After a successful sales call, the parties would attempt to secure a contract.

Throughout the next several months, Patton, often accompanied by Per-Se employees Skip Best or Holly Russo, made approximately twelve to fifteen sales calls to various hospitals to promote the 340B initiative. Best testified that only two of these meetings resulted in a “term sheet,” or drafted contract, being presented to the client. Neither of these clients, however, ever signed a contract for the 340B program. During this time, Patton worked and communicated almost exclusively with Best, who was the Vice President of Pharmacy Solutions at Per-Se. Best reported to Scott Bagwell, Executive Vice President of Sales and Marketing of Pharmacy Solutions at Per-Se.

After McKesson acquired Per-Se in January 2007, Best discovered that his position at Per-Se was being eliminated. Before he left at the end of April, Best attempted on several occasions to convince his superiors to formalize Per-Se’s relationship with CBG. Scott Bagwell responded hopefully, but expressed reservations about the 340B initiative, writing, in an email to Best, that “there are many disconnected dots in the scenario [ ] you’re describing.” R.O.A. at 244.

At the same time, Patton was becoming increasingly concerned about CBG’s lack of a formal contract with Per-Se. In an email to Best in mid-January 2007, Patton noted that he had “yet to find anything that was cut-in-stone.” R.O.A. at 201. Patton indicated that he “had no concern about getting fairly compensated by Per-Se” but “with McKesson now entering the picture,” he wanted a “formalized contract.” Id. In a letter to Scott MacKenzie, President of Pharmacy Solutions at Per-Se, in mid-February 2007, Patton wrote that “we need to structure a financial compensation program that allow [sic] for CBG and my broker network to keep the leads and development moving forward.” R.O.A. at 214. During a recorded telephone conversation with Scott Bagwell in early April 2007, who had since become the Senior Vice President of Sales and Marketing at McKesson, Patton stated that there was “no formal structure. That is what we are trying to work around. [373]*373Skip kept telling me I have a sample contract, but it is not ready to show you.” R.O.A. at 196. Bagwell informed Patton that a tentative contract was being drafted.

By the end of April, however, Bagwell emailed Patton and informed him that “the distribution contract with CBG will be delayed several months” as a result of the McKesson acquisition. R.O.A. at 228. Bagwell made clear in a subsequent email that “until we have a contract in place with CBG,” Per-Se was “not authorizing any sales calls on McKesson’s Easy340b solution.” R.O.A. at 226. In the meantime, CBG apparently continued to go on sales calls and to correspond with hospitals about the 340B initiative. In early May, Bagwell sent another email “ask[ing] CBG again to stop implying that there is a formal relationship to any customer between CBG and McKesson.” R.O.A. at 184.

B. Procedural History

On May 18, 2007, apparently believing that no formal contract would come to fruition, CBG sued McKesson in the Lo-rain County Court of Common Pleas, alleging breach of contract, promissory es-toppel, and breach of the implied covenant of good faith and fair dealing. McKesson timely removed the suit to the United States District Court for the Northern District of Ohio based upon diversity jurisdiction.

On September 20, 2007, CBG filed a second amended complaint with the federal district court, alleging breach of contract, promissory estoppel, and unjust enrichment. On December 28, 2007, CBG filed a motion for leave to file a third amended complaint seeking to add a claim for breach of fiduciary duty against McKesson.

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Bluebook (online)
326 F. App'x 369, Counsel Stack Legal Research, https://law.counselstack.com/opinion/commerce-benefits-group-inc-v-mckesson-corp-ca6-2009.