Corcoran et al v. CVS Health Corporation

Northern District of California, cand-4:2015-cv-03504

Exhibit CVS Proposal for Adjudication of Individualized Issues

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1 Enu Mainigi (admitted pro hac vice) Grant A. Geyerman (admitted pro hac vice) 2 WILLIAMS & CONNOLLY LLP 725 Twelfth Street, N.W. 3 Washington, DC 20005 4 Telephone: (202) 434-5000 Facsimile: (202) 434-5029 5 Edward W. Swanson (Cal. Bar No. 159859) 6 August Gugelmann (Cal. Bar No. 240544) 7 SWANSON & MCNAMARA LLP 300 Montgomery Street, Suite 1100 8 San Francisco, CA 94104 Telephone: (415) 477-3800 9 Facsimile: (415) 477-9010 10 Attorneys for Defendant CVS Pharmacy, Inc. 11 12 IN THE UNITED STATES DISTRICT COURT 13 FOR THE NORTHERN DISTRICT OF CALIFORNIA 14 OAKLAND DIVISION 15 16 Christopher Corcoran, et al., Case No. 15-cv-03504-YGR 17 Plaintiffs, CLASS ACTION 18 v. CVS's Proposal for Adjudication of 19 Individualized Issues CVS Pharmacy, Inc., 20 Date: May 13, 2020 21 Defendant. Time: 9:30 a.m. 22 Courtroom: 1 Judge: Hon. Yvonne Gonzalez Rogers 23 24 In conjunction with the submission of proposed jury instructions, CVS submit this bench brief 25 to identify how the Court may structure the proceedings (1) to adjudicate issues susceptible to 26 common, class-wide evidence during the August 2020 trial, and (2) to adjudicate later certain issues 27 that require individualized class member-by-class member proof. See Arthur Young & Co. v. U. S. 28 CVS Proposal for Adjudication of CASE NO. 15-CV-03504-YGR Individualized Issues 1 1 Dist. Court, 549 F.2d 686, 692 (9th Cir. 1977) (affirming district court's "certifying the class issues 2 and separating certain other issues for individual adjudication"); see also Manual For Complex 3 Litigation, Federal Judicial Center § 21.5, p.306 (2004) ("In jury cases, the court may consider trying 4 common issues first, preserving individual issues for later determination."); see also id. § 22.756 5 (suggesting development of a "trial plan" to "address individual issues, such as specific causation and 6 damages, and defenses such as comparative negligence or limitations"); see also id. § 22.757 7 (recommending courts "balance the need for individualized determinations, even apart from damages, 8 on issues such as the type or duration of exposure, proximate causation, comparative causation, or the 9 applicability of different defenses"). This two-part structure is necessary to ensure protection of the 10 defendant's Constitutional Due Process and Seventh Amendment rights to present its defenses to each 11 proposed class member's claim(s) and to have each of those defenses litigated. See, e.g., In re Asacol 12 Antitrust Litig., 907 F.3d 42, 55 (1st Cir. 2018) (Where "determining whether any given individual 13 was injured (and therefore has a claim) turns on an assessment of the individual facts concerning that 14 person…, the defendant must be offered the opportunity to challenge each class member's proof that 15 the defendant is liable to that class member." (citing Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 16 366–67 (2011)))1; In re Fortune Sys. Secs. Litig., 680 F. Supp. 1360, 1372 (N.D. Cal. 1987) 17 ("Defendants may still come to trial and attack each plaintiff's actual reliance," for example, "by 18 proving that an individual plaintiff purchased despite knowledge of the falsity or omission, or that he 19 would have purchased even if he had known of the falsity or omission." (second and fourth emphases 20 in original)); Porsche Cars N. Am., Inc. v. Diamond, 140 So. 3d 1090, 1098 (Fla. 3d DCA 2014) 21 (Florida Deceptive Trade Practices Act) ("When the individual knowledge and experience of the 22 consumer is an important element of the cause of action and its defense, there can be no class-wide 23 proof that injury was not reasonably avoidable [and thus no class-wide proof of 'unfairness']."); 24 Hanrahan v. Specialized Loan Servicing, LLC, 54 F. Supp. 3d 149, 154 (D. Mass. 2014) 25 (Massachusetts Consumer Protection Act) ("Both the defendant's and the plaintiff's conduct, 26 27 1 28 All emphases are added unless otherwise noted. CVS Proposal for Adjudication of CASE NO. 15-CV-03504-YGR Individualized Issues 2 1 knowledge, and what they should have reasonably known may be factors in determining whether an 2 act or practice is unfair.").2 3 Structuring the proceeding to try common issues first, and individualized issues separately, 4 here would promote "convenience, [] avoid prejudice, [and] [] expedite and economize" the 5 proceedings. See Fed. R. Civ. P. 42(b); Jinro Am. Inc. v. Secure Investments, Inc., 266 F.3d 993, 998 6 (9th Cir.), amended on other grounds on denial of reh'g, 272 F.3d 1289 (9th Cir. 2001) (affirming 7 bifurcation as "a reasonable way to promote clarity and judicial economy"). It is also a recognized 8 procedure in complex litigation involving common, dispositive issues, the resolution of which would 9 materially advance resolution of the entire class's claims. See, e.g., In re Copley Pharm., Inc., 161 10 F.R.D. 456, 461–62 (D. Wyo. 1995) ("[T]here will be two phases: (1) a trial of common underlying 11 factual issues to determine [] liability, if any, to the class, and (2) separate trials in the transferor 12 districts where Plaintiffs will have to prove…individual causation…."); see also id. 462 n.6 13 14 15 16 2 Other courts, including Asacol itself, have denied class certification where plaintiffs did not come 17 forward with an administratively feasible way to allow defendants to litigate their defenses as to each proposed class member, as the Constitution requires. See, e.g., In re Rail Freight Fuel Surcharge 18 Antitrust Litig., 934 F.3d 619, 627 (D.C. Cir. 2019) ("Given the need in this case for at least 2,037 19 individual determinations of injury and causation, the district court did not abuse its discretion in denying class certification on the ground that common issues do not predominate."); In re Loestrin 24 20 FE Antitrust Litig., 410 F. Supp. 3d 352, 402–03 (D.R.I. 2019) (denying class certification in part after noting "injury-in-fact" was an element of the plaintiffs' claims and the only way to identify 21 "precisely who among the [] Class" was uninjured was by "simply put – asking them"); In re Intuniv 22 Antitrust Litig., No. 1:16-cv-12396-ADB, 2019 WL 3947262, at *8 (D. Mass. Aug. 21, 2019) ("Where the [plaintiffs] have failed to put forth a reasonable and workable plan to weed out the more than 10,000 23 uninjured class members in each putative class and defendants intend to challenge any attestation that individual class members were injured, [plaintiffs] have not shown that questions of law or fact common 24 to class members will predominate over any questions affecting only individual members." (quotation 25 marks omitted)). CVS believes the same result is appropriate here but understands from the Court's comments at the August 19, 2019 and November 12, 2019 hearings that the Court is not inclined to 26 revisit class certification following the Ninth Circuit's decision in this matter. To the extent Plaintiffs fail to propose a feasible way for adjudicating individualized issues and the Court wishes to revisit class 27 certification in light of the principles in this brief, CVS is prepared to brief the issue on any schedule the 28 Court may direct. CVS Proposal for Adjudication of CASE NO. 15-CV-03504-YGR Individualized Issues 3 1 (distinguishing "'general causation', that is the ability to cause harm, and 'individual causation', the 2 harm, if any, to a particular plaintiff").3 3 Specifically, the parties submit that the following issues are susceptible to proof by common, 4 class-wide evidence be tried before the jury at the August trial: 5  Whether Plaintiffs are third-party beneficiaries of the five CVS-PBM contracts; 6  Whether CVS breached each of the five CVS-PBM contracts; 7  Whether CVS's conduct was "deceptive" or "unfair" under the class states' consumer 8 protection statutes4; and 9  Whether there was a superseding cause of the plaintiff's injury, such as the pharmacy 10 benefit manager or insurance company's role in determining the plaintiff's copay, such that CVS's conduct was not the proximate cause of injury or harm. 11 12 If the jury finds for CVS at the August trial on any of these issues, the case will end and there will be 13 no need for further proceedings on any individualized issues. Should Plaintiffs prevail, however, then 14 in a subsequent proceeding, CVS is entitled to litigate at least the following issues that involve 15 individual, class member-by-class member questions: 16  Whether CVS's conduct vis-à-vis each member of the Florida and Massachusetts class 17 qualifies as "unfair" for purposes of those statutes' definitions of the term; 18  Whether the individual class member's knowledge and awareness of the HSP program, the HSP price, and/or how their insurance copayments were determined, at the time of 19 their at-issue purchase, defeats (i) proximate causation (All States), (ii) reliance on 20 21 3 See also, e.g., In re Bendectin Litig., 857 F.2d 290, 308 (6th Cir. 1988) ("In affirming a trial solely on 22 the issue of the defense of statute of limitations…, we…held that 'Rule 42(b) is sweeping in its terms 23 and allows the court, in its discretion, to grant a separate trial of any kind of issue in any kind of case."); Wheelahan v. G D Searle & Co., 814 F.2d 655 (Table), 1987 WL 267679, at *1–2 (4th Cir. 1987) 24 (affirming bifurcation of causation issue); Yung v. Raymark Indus., Inc., 789 F.2d 397, 401 (6th Cir. 1986) (affirming bifurcation of statute of limitations defense for separate trial); Bradley v. City of 25 Cleveland, No. 1:11-cv-781, 2012 WL 775081, at *2–3 (N.D. Ohio Mar. 7, 2012) (ordering bifurcation 26 where single issue might moot "vast majority of Plaintiffs' claims" and "would serve to increase judicial economy. . . without prejudicing any of the parties"). 27 4 Under the Florida and Massachusetts statutes, whether conduct was "unfair" turns on individualized, 28 plaintiff-specific information. CVS Proposal for Adjudication of CASE NO. 15-CV-03504-YGR Individualized Issues 4 1 CVS's alleged misrepresentations (Arizona and California), or (iii) the entire cause of action because of the statute of limitations (All States); and 2  Whether (i) the class member had (and reached) an out-of-pocket maximum in the year 3 in which his or her at-issue purchase was made or (ii) was reimbursed by a third-party payor for the copayment, which bear on the presence of injury and, assuming there is an 4 injury, the appropriate amount of damages (All States). 5 As it relates to adjudicating individualized issues, then-Judge Sotomayor wrote for the Second 6 Circuit suggesting several "management tools available to a district court," including: 7 8 (1) bifurcating…trials with the same or different juries; (2) appointing a magistrate judge or special master to preside over individual [] 9 proceedings; (3) decertifying the class after the liability trial and providing notice to class members concerning how they may proceed to 10 prove [individualized issues]; (4) creating subclasses; or (5) altering or 11 amending the class. 12 In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124, 141 (2d Cir. 2001) (discussing 13 individualized damages proceedings), abrogated on other grounds by In re Initial Pub. Offerings Sec. 14 Litig., 471 F.3d 24 (2d Cir. 2006). Justice Sotomayor's recommendation reflects how courts have 15 16 approached individualized issues. See, e.g., In re Copley Pharm., 161 F.R.D. at 461–62 (initial trial on 17 common issues followed by separate, individual trials before different juries); Hilao v. Estate of 18 Marcos, 103 F.3d 767, 782 (9th Cir. 1996) (affirming district court's use of three-phase class-action 19 trial, which included special master deciding individual claims of approximately 10,000 class 20 members in the Philippines); Sterling v. Velsicol Chem. Corp., 855 F.2d 1188, 1194 (6th Cir. 1988) 21 22 (affirming district court's trial structure, which included "defer[ring] to individual hearings, to be held 23 after trial, the issues of causation and injury of any other persons purporting to be members of the 24 class"); cf. In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 209 F.R.D. 323, 352–53 (S.D.N.Y. 25 2002) (denying class certification where class trial would impose only "general liability" and be 26 followed by "individual actions to determine if [individual class members] were entitled to relief in 27 28 light of…statutes of limitations" and each individual's potential knowledge of the risk). Other courts CVS Proposal for Adjudication of CASE NO. 15-CV-03504-YGR Individualized Issues 5 1 have held trials on common, class-wide issues, acknowledged that individualized issues must be 2 separately litigated, and yet deferred consideration of how exactly to address the individualized issues 3 until after the conclusion of the initial trial. See, e.g., Kamakahi v. Am. Soc'y for Reprod. Med., 305 4 F.R.D. 164, 194 (N.D. Cal. 2015) ("[T]here may be no need to adjudicate damages—the parties might 5 settle, or Defendants might prevail at the violation phase and be entitled to judgment. Time will tell. 6 7 The question of how damages and injury-in-fact should be adjudicated is reserved until the violation 8 phase is complete."). 9 Since the parties are submitting proposed jury instructions for the August trial, it is appropriate 10 at this time for the parities and the Court to address how the proceeding with be structured to 11 adjudicate individualized issues. 12 13 Dated: May 5, 2020 Respectfully submitted, 14 15 By: Grant A. Geyerman ______________ 16 Enu Mainigi (admitted pro hac vice) 17 Grant A. Geyerman (admitted pro hac vice) WILLIAMS & CONNOLLY LLP 18 725 Twelfth Street, N.W. Washington, DC 20005 19 Telephone: (202) 434-5000 20 Facsimile: (202) 434-5029 21 Edward W. Swanson (Cal. Bar No. 159859) 22 August Gugelmann (Cal. Bar No. 240544) 23 SWANSON & MCNAMARA LLP 300 Montgomery Street, Suite 1100 24 San Francisco, CA 94104 Telephone: (415) 477-3800 25 Facsimile: (415) 477-9010 26 Attorneys for Defendant CVS Pharmacy, Inc. 27 28 CVS Proposal for Adjudication of CASE NO. 15-CV-03504-YGR Individualized Issues 6