Jerry Beeman & Pharmacy Servs., Inc. v. Caremark Inc.

322 F. Supp. 3d 1027
CourtDistrict Court, C.D. California
DecidedJanuary 4, 2018
DocketED 02-cv-01327 VAP (KKx), ED 04-cv-00407 VAP (KKx)
StatusPublished
Cited by7 cases

This text of 322 F. Supp. 3d 1027 (Jerry Beeman & Pharmacy Servs., Inc. v. Caremark Inc.) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jerry Beeman & Pharmacy Servs., Inc. v. Caremark Inc., 322 F. Supp. 3d 1027 (C.D. Cal. 2018).

Opinion

Virginia A. Phillips, Chief United States District Judge

On October 6, 2017, Defendants Express Scripts, Inc. and Medco Health Solutions, Inc. ("Defendants") filed a Motion for Terminating Sanctions Against Plaintiffs for Spoliation of Evidence ("Motion"). (Doc. No. 399).1 Defendants Argus Health Systems, Inc., Benescript Services, Inc., Prime Therapeutics, Inc., and First Health Services, Corp. have filed joinders to this motion. (Doc. Nos. 400, 404, 405, 406).2 Plaintiffs filed their opposition to Defendants' Motion on October 30, 2017. (Doc. No. 407). Defendants filed their Reply in Support of their Motion on November 20, 2017. (Doc. No. 408).

After considering all papers filed in support of and in opposition to the motions, the Court Grants Defendants' Motion.

I. BACKGROUND

A. Procedural Background

Because the parties are familiar with the facts, they are restated here only when necessary.

Plaintiffs are owners of retail pharmacies. On December 5, 2002, they filed the above-captioned, putative class action (Case No. CV 02-1327), alleging that defendants are "prescription drug claims processors" ("PBMs") that (1) did not prepare a fee study mandated by California Civil Code § 2527 ; (2) failed to distribute such a fee study to their clients; or (3) prepared flawed fee studies. (Doc. No. 1, *1031¶¶ 31-32). On February 25, 2004, plaintiffs filed a second class action, Case No. CV 04-0407, alleging similar violations of California Civil Code § 2527 and California Business & Professions Code § 17200. (Case No. 04-0407, Doc. No. 1).

Civil Code § 2527(c) sets forth the formula for calculating a pharmacy's fee for the purpose of the studies. The statute requires PBMs to apply this formula, then compile the data collected into a study report, which must include the information specified in § 2527(c). PBMs are under an obligation, every two years thereafter, either to perform a new survey or to supply their clients with a copy of the previously transmitted study together with a notice of the cost of living changes (measured by the Consumer Price Index) since the earlier study was prepared. Cal. Civ. Code § 2527(d). Any PBM that is not in compliance with the requirements of Civil Code § 2527 is prohibited from entering into any new contract with a licensed California pharmacy, performing the provisions of an existing contract with a licensed California pharmacy, or processing any prescription drug claims submitted by a licensed California pharmacy. Id., at § 2527(a).

Civil Code § 2528 creates a private right of action for a PBM's violation of Civil Code § 2527. That section imparts standing to sue upon owners of licensed California pharmacies that have a contractual relationship with, or render pharmaceutical services to, a beneficiary of a client of the offending PBM. Id. Successful plaintiffs are entitled to civil remedies between $1,000 and $10,000 per violation of Civil Code § 2527, injunctive and declaratory relief, and reasonable attorneys' fees and costs. Id., at § 2528.

In July 2004, this Court granted Defendants' motion to dismiss in Case No. 02-1327, holding that plaintiffs had not sustained an injury-in-fact sufficient to confer Article III Standing. (Doc. No. 155). The Ninth Circuit reversed, concluding that the pharmacists had alleged a "procedural injury" sufficient to confer Article III standing. See Beeman v. TDI Managed Care Servs., 449 F.3d 1035, 1039 (9th Cir. 2006).

Defendants then sought judgment on the pleadings on free speech grounds; this Court denied the motion in May 2007. (Doc. No. 218). In August 2007, the Court granted Defendants' motion for summary judgment, holding that because three of the plaintiff pharmacists had brought a parallel suit in state court, Bradley v. First Health Services Corp., Case No. BC319292, and litigated that case to final adverse judgment, these plaintiffs were barred under res judicata principles from pursuing their overlapping claims in this action. (Doc. No. 249). On October 5, 2007, the Court consolidated Case Nos. 02-1327 and 04-0407. (Doc. No. 258; Case No. 04-0407, Doc. No. 303).

On July 19, 2011, a split Ninth Circuit panel affirmed this Court's denial of defendants' motion for judgment on the pleadings on free speech grounds. Jerry Beeman & Pharmacy Servs., Inc. v. Anthem Prescription Mgmt., LLC, 652 F.3d 1085, 1107 (9th Cir. 2011). The Ninth Circuit granted defendants' petition for rehearing en banc in October 2011, and later certified the state law free speech question to the California Supreme Court. See Beeman v. Anthem Prescription Mgmt., 689 F.3d 1002 (9th Cir. 2012) (en banc). In December 2013, the California Supreme Court concluded that Cal. Civ. Code § 2527, et seq. does not violate the California Constitution's free speech protections. Beeman v. Anthem Prescription Mgmt., 58 Cal. 4th 329, 165 Cal.Rptr.3d 800, 315 P.3d 71 (2013). The Ninth Circuit then vacated the panel opinion and remanded the action to this Court for further proceedings. (Doc. No. 308). Its mandate issued on April 14, 2014. (Doc. No. 310).

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Cite This Page — Counsel Stack

Bluebook (online)
322 F. Supp. 3d 1027, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jerry-beeman-pharmacy-servs-inc-v-caremark-inc-cacd-2018.