Shepards Discount Drugs Inc. v. Louisiana Wholesale Drug Co Inc

CourtDistrict Court, W.D. Louisiana
DecidedOctober 11, 2024
Docket6:24-cv-00735
StatusUnknown

This text of Shepards Discount Drugs Inc. v. Louisiana Wholesale Drug Co Inc (Shepards Discount Drugs Inc. v. Louisiana Wholesale Drug Co Inc) is published on Counsel Stack Legal Research, covering District Court, W.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shepards Discount Drugs Inc. v. Louisiana Wholesale Drug Co Inc, (W.D. La. 2024).

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF LOUISIANA LAFAYETTE DIVISION

SHEPARDS DISCOUNT DRUGS INC CASE NO. 6:24-CV-00735

VERSUS JUDGE ROBERT R. SUMMERHAYS

LOUISIANA WHOLESALE DRUG CO MAGISTRATE JUDGE CAROL B. INC WHITEHURST

REPORT AND RECOMMENDATION

Before the Court is Defendant’s, Louisiana Wholesale Drug Co., Inc. (“LWD”), Rule 12(b)(6) Motion to Dismiss for Failure to State a Claim. (Rec. Doc. 10). Plaintiff, Shepards Discount Drugs, Inc. (“Shepards”), opposes the Motion (Rec. Doc. 19), and LWD replied (Rec. Doc. 20). The Motion was referred to the undersigned magistrate judge for review, report, and recommendation in accordance with the provisions of 28 U.S.C. § 636 and the standing orders of this Court. Considering the evidence, the law, and the arguments of the parties, and for the reasons fully explained below, it is RECOMMENDED that LWD’s Motion to Dismiss be GRANTED in part and DENIED in part. Factual Background Shepards filed the present action on May 31, 2024, seeking damages and injunctive relief alleging violation of the Louisiana Unfair Trade Practices Act (“LUTPA”) and breach of contract. (Rec. Doc. 1). On July 26, 2024, LWD filed the Motion to Dismiss (Rec. Doc. 10) presently before the Court.

According to the Complaint, Shepards is an independent community retail pharmacy in Columbia, Mississippi, who contracted with LWD to provide pharmaceuticals. (Rec. Doc. 1, ¶¶ 10 & 17). Per Shepards, LWD was their primary

wholesaler and the only wholesaler from whom they ordered controlled substances. (Id. at ¶ 17). As a wholesale distributor, LWD maintains a compliance department that is responsible for onboarding new pharmacies and monitoring the dispensation of controlled substance medications. (Id. at ¶ 19). Shepards contends that “LWD’s

Compliance Department fails to adhere to the best compliance policies promulgated by the DEA and other regulatory agencies” and “does not follow its own compliance agreements.” (Id. at ¶ 21).

Per Shepards, LWD requires all of its retail pharmacies to complete annual Customer Site Survey which includes signing a Compliance Agreement Form. (Id. at ¶ 24). Shepards reviewed and signed said Compliance Agreement Form annually. (Id.). The Compliance Agreement Form reads, in pertinent part, as follows:

• (“Customer”) agrees that it will abide by all applicable laws, rules, regulations, ordinances and guidance of the federal Drug Enforcement Administration (DEA), the United States Food and Drug Administration (FDA), and the states into which it dispenses controlled substances and the states in which it is licensed. Customer agrees that if will not dispense controlled substances if it suspects that a prescription is not issued for a legitimate medical purpose or in the normal course of professional practice.

• Customer will provide to LWD any information regarding its dispensing and/or distribution of controlled substances which LWD may need to evaluate Customer’s compliance with DEA or State regulations. LWD reserves the right in all cases to terminate sales of controlled substances to customers that do not meet LWD’s Standards of Compliance.

• Customer agrees to make LWD its Primary Controlled Substance supplier for any/all Controlled Substance products purchased. The Primary CS supplier/Backup CS supplier should reflect at least 95% to 5% ratio, for all CS products that said store has in stock. (emphasis is original).

• Customer agrees to itself monitor and be alert to the proper usage of controlled drugs dispensed by it, and to exercise due diligence to ensure the legal compliance by its prescribers and patients with applicable laws and regulatory guidelines. Customer is expected to exercise its professional knowledge and expertise to keep current on all such legal and regulatory guidelines.

• Customer shall notify LWD Compliance with any pending or previous State Board action, DEA investigation or Compliance related issues. Failure to do so, will subject customer to termination of controlled substance ordering privileges.

(Rec. Doc. 1-4).

Notably, the Compliance Agreement Form also provides that “LWD reserves the right in all cases to terminate sales of controlled substances to customers that do not meet LWD’s Standards of Compliance” and that the customer “agrees that failure to comply with this Agreement may result in the termination of the relationship between LWD and Customer…” (Rec. Doc. 1, ¶ 26; see also Rec. Doc. 1-4). Shepards maintains that it never received any document regarding LWD’s “Standards of Compliance” referenced in the Compliance Agreement Form. (Rec.

Doc. 1, ¶ 27). Shepards also signed a Controlled Substance Dispensing Agreement and a Subscription Agreement both of which detailed certain requirements and expectations of the business relationship. (Id. at ¶¶ 20 & 28).

According to Shepards, “LWD arbitrarily terminated [Shepards’] ordering privileges following an alleged increase in its purchase of opiates over a 6-month period.” (Id. at ¶ 30). Specifically, “[o]n or about September 8, 2023, Brad Stevens, an LWD Compliance Officer, sent an e-mail to [Shepards] regarding a flag for

growth of Hydrocodone 10 MG tabs. [Shepards] provided a timely response addressing the concerns.” (Id. at ¶ 32). On September 12, 2023, LWD Compliance Officers conducted an in-person site visit whereat they informed Shepards that it was

a top purchaser of opiates. (Id. at ¶ 33). Shepards contends that the Compliance Officers also informed them that “the ratio between his [controlled substance] purchases and other pharmaceutical purchases was below the 15% [controlled substance] perimeter set by LWD—i.e., [Shepards’] controlled substances purchases

were less than 15% of its total drug purchases.” (Id.). On September 21, 2023, Shepards received an email from an LWD Compliance Officer asking them to “document everything in support of [their]

hydrocodone numbers” and notified Shepards that they would like to see a decrease in their hydrocodone numbers. (Rec. Doc. 1, ¶ 35; see also Rec. Doc. 1-8). The email did not cite any specific rules, regulations, policies, target numbers, or violations

with respect to opiates or hydrocodone or indicate that failure to decrease numbers was in violation of any of LWD’s Standards of Compliance. (Id.). Per Shepards, they kept their controlled substance purchases to under 15% of

their total purchases. (Id. at ¶ 38). In February 2024, LWD informed Shepards that they were under the 15% threshold for total controlled substance sales but that its sales of opiates had increased. (Id. at ¶ 40). On February 26, 2024, LWD terminated Shepards’ controlled substance ordering privileges effective March 1, 2024. (Id. at

¶ 41; see also Rec. Doc. 1-9). Shepards contends that the termination e-mail falsely stated that they had been emailed, visited, and notified via telephone regarding its high volume of ordering and dispending opiates and that it had a history of

documented violations. (Rec. Doc. 1, ¶¶ 42-43). Shepards denies having a history of documented violations with LWD or any other state or federal regulatory agency. (Id. at ¶ 43). As a result of the termination, Shepards asserts that its customers were

prejudiced with many of them experiencing disrupted access to their medications and they were forced to refer customers to competitor pharmacies. (Id. at ¶ 45). Shepards was also placed on Mallinckrodt’s, a drug manufacturer, Suspicious Order

Monitoring (“SOM”) list “resulting in [Shepards] being unable to buy pharmaceuticals from Mallinckrodt at a price that was commercially viable for Shepards’] customers.” (Id. at ¶ ¶ 48-50). In sum, Shepards maintains that “LWD

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Baker v. Putnal
75 F.3d 190 (Fifth Circuit, 1996)
Collins v. Morgan Stanley Dean Witter
224 F.3d 496 (Fifth Circuit, 2000)
Southern Scrap Material Co. v. Abc Insurance
541 F.3d 584 (Fifth Circuit, 2008)
Lormand v. US Unwired, Inc.
565 F.3d 228 (Fifth Circuit, 2009)
Papasan v. Allain
478 U.S. 265 (Supreme Court, 1986)
Bell Atlantic Corp. v. Twombly
550 U.S. 544 (Supreme Court, 2007)
Ashcroft v. Iqbal
556 U.S. 662 (Supreme Court, 2009)
In Re Katrina Canal Breaches Litigation
495 F.3d 191 (Fifth Circuit, 2007)
Cheramie Services, Inc. v. Shell Deepwater Production, Inc.
35 So. 3d 1053 (Supreme Court of Louisiana, 2010)
Roustabouts, Inc. v. Hamer
447 So. 2d 543 (Louisiana Court of Appeal, 1984)
State Ex Rel. Guste v. Orkin Exterminating Company, Inc.
528 So. 2d 198 (Louisiana Court of Appeal, 1988)
Union Tex. Petroleum Corp. v. Mid La. Gas Co.
503 So. 2d 159 (Louisiana Court of Appeal, 1987)
Ricky's Diesel Service, Inc. v. Pinell
906 So. 2d 536 (Louisiana Court of Appeal, 2005)

Cite This Page — Counsel Stack

Bluebook (online)
Shepards Discount Drugs Inc. v. Louisiana Wholesale Drug Co Inc, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shepards-discount-drugs-inc-v-louisiana-wholesale-drug-co-inc-lawd-2024.