NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 5 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
CZ SERVICES, INC., DBA CareZone No. 22-16408 Pharmacy; CAREZONE PHARMACY, LLC, D.C. No. 3:18-cv-04217-JD
Plaintiffs-Appellants, MEMORANDUM* v.
EXPRESS SCRIPTS HOLDING COMPANY; EXPRESS SCRIPTS, INC.,
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California James Donato, District Judge, Presiding
Argued and Submitted August 15, 2023 Anchorage, Alaska
Before: MURGUIA, Chief Judge, and PAEZ and NGUYEN, Circuit Judges.
This case stems from statements that Defendants-Appellants Express Scripts,
Inc. and Express Scripts Holding Company (collectively “Express Scripts”) made
concerning Plaintiffs-Appellants CZ Services, Inc. and its wholly owned
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. subsidiary, CareZone Pharmacy LLC (collectively the “CZ Pharmacies”). As
relevant to this appeal, the CZ Pharmacies sued Express Scripts for defamation and
brought a claim under Tennessee’s “Any Willing Provider” (“AWP”) statute.
Before trial, the district court granted partial summary judgment on the AWP claim
in favor of Express Scripts. During trial, the district court concluded that the CZ
Pharmacies were limited-purpose public figures and therefore subject to a higher
standard of proof on their defamation claim. The district court also concluded that
the CZ Pharmacies were not entitled to a jury instruction explaining certain state
licensure laws. After a seven-day trial, the jury found against the CZ Pharmacies.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
Whether a plaintiff is a public figure is a legal question that we review de
novo. Planet Aid, Inc. v. Reveal, 44 F.4th 918, 923–24 (9th Cir. 2022). Likewise,
we review de novo a grant of summary judgment, Pavoni v. Chrysler Grp., LLC,
789 F.3d 1095, 1098 (9th Cir. 2015), whether the district court’s jury instructions
were legally correct and complete, Clem v. Lomeli, 566 F.3d 1177, 1180 (9th Cir.
2009), and the district court’s interpretation of state law, Killgore v. SpecPro Pro.
Servs., LLC, 51 F.4th 973, 982 (9th Cir. 2022).
1. We have “articulated a three-prong test to determine whether an
individual or entity is a limited-purpose public figure”:
[W]e consider whether (i) a public controversy existed when the statements were made, (ii) whether the alleged defamation is related
2 to the plaintiff’s participation in the controversy, and (iii) whether the plaintiff voluntarily injected itself into the controversy for the purpose of influencing the controversy’s ultimate resolution.
Planet Aid, 44 F.4th at 925 (quoting Makaeff v. Trump Univ., LLC, 715 F.3d 254,
266 (9th Cir. 2013)). The parties agree that the first two prongs are met here.
As to the third prong, the CZ Pharmacies contend that they never
“voluntarily injected” themselves into the public controversy. The CZ Pharmacies
do not dispute that CareZone Inc., a technology company that provided an app-
based delivery system for prescriptions, voluntarily thrust itself into the public
controversy. Rather they contend that the actions of Jonathan Schwartz—the
founder, sole owner, and president of the CZ Pharmacies and the co-founder of
CareZone, Inc.—were “solely” on behalf of CareZone Inc. and not the CZ
Pharmacies. This argument is unpersuasive. Although not every action by Mr.
Schwartz can be imputed to the CZ Pharmacies, Mr. Schwartz’s public relations
actions allegedly on behalf of only CareZone Inc. directly served the CZ
Pharmacies’ interest in having Express Scripts rescind its termination decision.
The CZ Pharmacies and CareZone Inc.’s corporate structure were closely
intertwined, such that Mr. Schwartz—in his role as president of the CZ Pharmacies
and CEO of CareZone Inc.—often appeared to be acting on behalf of both entities
interchangeably. The district court therefore did not err in concluding that the CZ
Pharmacies were limited-purpose public figures for this dispute because the
3 evidence shows that Mr. Schwartz, on behalf of the CZ Pharmacies, “engaged in a
PR campaign” that reached millions of people to “get Express Scripts to reconsider
its position” about terminating the CZ Pharmacies. See Planet Aid, 44 F.4th at 927
(concluding that the plaintiffs voluntarily injected themselves into a public
controversy “[b]y actively seeking attention from the press, promoting themselves
through social media, employing public relations staff, and soliciting donations and
grants”); Makaeff, 715 F.3d at 269 (highlighting the plaintiff’s “extensive
advertising efforts [that] ‘invited public attention, comment, and criticism.’”
(quoting Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 274 (3d Cir. 1980))).
2. The CZ Pharmacies next argue that the district court erred by refusing
to instruct the jury on relevant state pharmacy laws so that the jury could evaluate
whether Express Scripts defamed them by accusing the CZ Pharmacies of not
“operat[ing] legally” and being in “violation of state law.” This court’s decision in
Coastal Abstract Services Inc. v. First American Title Insurance Co. squarely
forecloses the CZ Pharmacies’ argument. 173 F.3d 725 (9th Cir. 1999). There we
held that without “a clear and unambiguous ruling from a court or agency of
competent jurisdiction,” a statement that an entity “was not properly licensed” to
operate a business in California could not be defamatory. Id. at 730–31. We
explained that “California defamation law requires that the offending statement
‘expressly or impliedly assert a fact that is susceptible to being proved false,’” and
4 that “statements by laypersons that purport to interpret the meaning of a statute or
regulation are opinion statements, and not statements of fact.” Id. (emphasis
added). So, whether the relevant state pharmacy laws “allowed” the CZ
Pharmacies to legally operate is an opinion statement, not a factual determination
for jury, and is not actionable. See id. at 731 n.4 (“The jury’s fact-finding role
does not extend . . . to a determination [on] whether [state] law, properly
interpreted, applies to [a person’s] conduct.”).
3. Finally, the CZ Pharmacies argue that the district court erred when it
rejected two theories of liability under the Tennessee AWP statute at summary
judgment. Tennessee’s AWP statute prohibits all “health insurance issuer[s]” and
“managed health insurance issuer[s]” from “[d]eny[ing] any licensed pharmacy . . .
the right to participate as a participating provider in any policy, contract or plan on
the same terms and conditions as are offered to any other provider of pharmacy
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 5 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
CZ SERVICES, INC., DBA CareZone No. 22-16408 Pharmacy; CAREZONE PHARMACY, LLC, D.C. No. 3:18-cv-04217-JD
Plaintiffs-Appellants, MEMORANDUM* v.
EXPRESS SCRIPTS HOLDING COMPANY; EXPRESS SCRIPTS, INC.,
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of California James Donato, District Judge, Presiding
Argued and Submitted August 15, 2023 Anchorage, Alaska
Before: MURGUIA, Chief Judge, and PAEZ and NGUYEN, Circuit Judges.
This case stems from statements that Defendants-Appellants Express Scripts,
Inc. and Express Scripts Holding Company (collectively “Express Scripts”) made
concerning Plaintiffs-Appellants CZ Services, Inc. and its wholly owned
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. subsidiary, CareZone Pharmacy LLC (collectively the “CZ Pharmacies”). As
relevant to this appeal, the CZ Pharmacies sued Express Scripts for defamation and
brought a claim under Tennessee’s “Any Willing Provider” (“AWP”) statute.
Before trial, the district court granted partial summary judgment on the AWP claim
in favor of Express Scripts. During trial, the district court concluded that the CZ
Pharmacies were limited-purpose public figures and therefore subject to a higher
standard of proof on their defamation claim. The district court also concluded that
the CZ Pharmacies were not entitled to a jury instruction explaining certain state
licensure laws. After a seven-day trial, the jury found against the CZ Pharmacies.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
Whether a plaintiff is a public figure is a legal question that we review de
novo. Planet Aid, Inc. v. Reveal, 44 F.4th 918, 923–24 (9th Cir. 2022). Likewise,
we review de novo a grant of summary judgment, Pavoni v. Chrysler Grp., LLC,
789 F.3d 1095, 1098 (9th Cir. 2015), whether the district court’s jury instructions
were legally correct and complete, Clem v. Lomeli, 566 F.3d 1177, 1180 (9th Cir.
2009), and the district court’s interpretation of state law, Killgore v. SpecPro Pro.
Servs., LLC, 51 F.4th 973, 982 (9th Cir. 2022).
1. We have “articulated a three-prong test to determine whether an
individual or entity is a limited-purpose public figure”:
[W]e consider whether (i) a public controversy existed when the statements were made, (ii) whether the alleged defamation is related
2 to the plaintiff’s participation in the controversy, and (iii) whether the plaintiff voluntarily injected itself into the controversy for the purpose of influencing the controversy’s ultimate resolution.
Planet Aid, 44 F.4th at 925 (quoting Makaeff v. Trump Univ., LLC, 715 F.3d 254,
266 (9th Cir. 2013)). The parties agree that the first two prongs are met here.
As to the third prong, the CZ Pharmacies contend that they never
“voluntarily injected” themselves into the public controversy. The CZ Pharmacies
do not dispute that CareZone Inc., a technology company that provided an app-
based delivery system for prescriptions, voluntarily thrust itself into the public
controversy. Rather they contend that the actions of Jonathan Schwartz—the
founder, sole owner, and president of the CZ Pharmacies and the co-founder of
CareZone, Inc.—were “solely” on behalf of CareZone Inc. and not the CZ
Pharmacies. This argument is unpersuasive. Although not every action by Mr.
Schwartz can be imputed to the CZ Pharmacies, Mr. Schwartz’s public relations
actions allegedly on behalf of only CareZone Inc. directly served the CZ
Pharmacies’ interest in having Express Scripts rescind its termination decision.
The CZ Pharmacies and CareZone Inc.’s corporate structure were closely
intertwined, such that Mr. Schwartz—in his role as president of the CZ Pharmacies
and CEO of CareZone Inc.—often appeared to be acting on behalf of both entities
interchangeably. The district court therefore did not err in concluding that the CZ
Pharmacies were limited-purpose public figures for this dispute because the
3 evidence shows that Mr. Schwartz, on behalf of the CZ Pharmacies, “engaged in a
PR campaign” that reached millions of people to “get Express Scripts to reconsider
its position” about terminating the CZ Pharmacies. See Planet Aid, 44 F.4th at 927
(concluding that the plaintiffs voluntarily injected themselves into a public
controversy “[b]y actively seeking attention from the press, promoting themselves
through social media, employing public relations staff, and soliciting donations and
grants”); Makaeff, 715 F.3d at 269 (highlighting the plaintiff’s “extensive
advertising efforts [that] ‘invited public attention, comment, and criticism.’”
(quoting Steaks Unlimited, Inc. v. Deaner, 623 F.2d 264, 274 (3d Cir. 1980))).
2. The CZ Pharmacies next argue that the district court erred by refusing
to instruct the jury on relevant state pharmacy laws so that the jury could evaluate
whether Express Scripts defamed them by accusing the CZ Pharmacies of not
“operat[ing] legally” and being in “violation of state law.” This court’s decision in
Coastal Abstract Services Inc. v. First American Title Insurance Co. squarely
forecloses the CZ Pharmacies’ argument. 173 F.3d 725 (9th Cir. 1999). There we
held that without “a clear and unambiguous ruling from a court or agency of
competent jurisdiction,” a statement that an entity “was not properly licensed” to
operate a business in California could not be defamatory. Id. at 730–31. We
explained that “California defamation law requires that the offending statement
‘expressly or impliedly assert a fact that is susceptible to being proved false,’” and
4 that “statements by laypersons that purport to interpret the meaning of a statute or
regulation are opinion statements, and not statements of fact.” Id. (emphasis
added). So, whether the relevant state pharmacy laws “allowed” the CZ
Pharmacies to legally operate is an opinion statement, not a factual determination
for jury, and is not actionable. See id. at 731 n.4 (“The jury’s fact-finding role
does not extend . . . to a determination [on] whether [state] law, properly
interpreted, applies to [a person’s] conduct.”).
3. Finally, the CZ Pharmacies argue that the district court erred when it
rejected two theories of liability under the Tennessee AWP statute at summary
judgment. Tennessee’s AWP statute prohibits all “health insurance issuer[s]” and
“managed health insurance issuer[s]” from “[d]eny[ing] any licensed pharmacy . . .
the right to participate as a participating provider in any policy, contract or plan on
the same terms and conditions as are offered to any other provider of pharmacy
services under the policy, contract or plan.” Tenn. Code Ann. § 56-7-2359(a)(1).
So, to bring a claim under the AWP, the CZ Pharmacies must first show that
Express Scripts, as a Pharmacy Benefits Manager (“PBM”), is either a “health
insurance issuer” or a “managed health insurance issuer.” Id.
The Tennessee AWP statute defines “managed health insurance issuer” as an
entity that “[o]ffers health insurance coverage or benefits under a contract that
restricts reimbursement for covered services to a defined network of providers,”
5 and is “regulated under” Title 56. Tenn. Code Ann. § 56-7-2359(d) (referencing
§ 56-32-128(a)). The Tennessee AWP statute does not, however, define the term
“health insurance issuer.” Another section within Title 56, Chapter 7, explains that
PBMs can be “health insurance issuer[s]” and “managed health insurance
issuer[s],” to the extent that they “provide[] health coverage to covered
individuals.” Tenn. Code Ann. § 56-7-3102(1)(A); see id. § 56-7-3102(5)
(providing that the term “‘pharmacy benefits manager’ includes, but is not limited
to, a health insurance issuer, [or] managed health insurance issuer”); cf. Tenn. Op.
Att’y Gen., 2014 WL 3700676, at *3 (stating that whether PBMs fall under § 56-7-
2359 depends on the context). At summary judgment, the CZ Pharmacies failed to
point to any evidence that Express Scripts provides health insurance coverage.
In the alternative, the CZ Pharmacies argue that Express Scripts is subject to
the Tennessee AWP statute “as the agent of its health-insurer clients, which are
subject to that law.” “Agency is the fiduciary relationship that arises when [a
principal] manifests assent to [an agent] that the agent shall act on the principal’s
behalf and subject to the principal’s conduct, and the agent manifests assent or
otherwise consents so to act.” Am. Airlines, Inc. v. Mawhinney, 904 F.3d 1114,
1124 (9th Cir. 2018) (quoting Restatement (Third) of Agency § 1.01 (2006)).
Although Express Scripts contracts with health insurance issuers, none of the
contracts show that the health insurance companies had “the right to substantially
6 control” Express Scripts’ activities. Williams v. Yamaha Motor Co., 851 F.3d
1015, 1025 (9th Cir. 2017).
AFFIRMED.