Corcoran et al v. CVS Health Corporation

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

Memorandum in Support of CVS MIL #2

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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 MOTION IN LIMINE #2: 19 TO PRECLUDE ARGUMENT THAT CVS Pharmacy, Inc., U&C CONTRACT DEFINITIONS ARE 20 CLEAR OR UNAMBIGUOUS 21 Defendant. 22 Date: May 13, 2020 23 Time: 9:30 a.m. 24 Courtroom: 1 Judge: Hon. Yvonne Gonzalez Rogers 25 26 27 28 CVS MIL #2: TO PRECLUDE ARGUMENT CASE NO. 15-CV-03504-YGR THAT U&C CONTRACT DEFINITIONS ARE CLEAR OR UNAMBIGUOUS 1 CVS Pharmacy, Inc. ("CVS") submits this motion in limine to preclude Plaintiffs from 2 presenting evidence or argument at trial to the effect that the definitions of "usual and customary" 3 ("U&C") price in the contracts between CVS and each of Caremark, Express Scripts, Medco, 4 MedImpact, and OptumRx (collectively the "PBMs") are clear or unambiguous. Any such evidence 5 or argument would contradict the Court's prior decisions and, accordingly, it would mislead and 6 confuse the jurors and unfairly prejudice CVS. 7 Before this Court's summary judgment ruling, Plaintiffs argued that the U&C definitions in 8 CVS's contracts with the PBMs clearly and unambiguously required CVS to submit its Health Savings 9 Pass ("HSP") program price as its U&C price. Plaintiffs wrote, for example, that the "clear and 10 explicit meaning" of the CVS-PBM contracts is that "the HSP price qualified as a U&C price" and that 11 the U&C definitions "could not be clearer." Pls.' Opp. to CVS's Mot. for Summ. J. at 12, Dkt. 304 12 (internal quotations omitted). On that basis, Plaintiffs argued that testimony regarding the PBMs' 13 14 understanding of the U&C definitions was parol evidence that should be excluded. Id. at 13–14. 15 This Court disagreed with Plaintiffs. The Court concluded at the summary judgment stage that 16 "Plaintiffs' argument that the contracts are clear and unambiguous is belied by the contractual 17 language itself." Order at 20, Dkt. 327 (Sep. 5, 2017). The Court further explained that terms 18 contained in the contracts—for example, "usual," "customary," and "applicable discounts"—are "open 19 to interpretation and thus require[] further evidence of the parties' intent and understanding." Id.1 20 Plaintiffs appealed from the Court's decision granting summary judgment for CVS, but they 21 did not appeal the Court's conclusion that the contract language is ambiguous. On the contrary, 22 Plaintiffs' appeal brief embraced the ambiguity of the U&C definitions, arguing that the question of 23 "whether defendants were required to submit HSP program rates as their U&C prices under each of 24 the relevant agreements" is "a contract-interpretation dispute that must proceed to trial." Brief for 25 Appellants at 37, Corcoran v. CVS Health Corp., No. 17-16996 (9th Cir. Feb. 12, 2018) (emphasis 26 27 1 See also Summ. J. Hr'g Tr. 19:13–15, Dkt. 326 (July 18, 2017) (The Court: "So you [Plaintiffs] say 28 that it is unambiguous. I can tell you right now, it's very ambiguous. And it's very ambiguous -- in fact, the term itself creates the ambiguity."). CVS MIL #2: TO PRECLUDE ARGUMENT CASE NO. 15-CV-03504-YGR THAT U&C CONTRACT DEFINITIONS 1 ARE CLEAR OR UNAMBIGUOUS 1 added & internal quotation marks omitted). The Ninth Circuit agreed with Plaintiffs and remanded for 2 trial on that basis. It held that the jury should decide the "key disputed factual questions relating to the 3 interpretation of the agreements and whether CVS was obligated to report its HSP prices as the U&C 4 prices." Corcoran v. CVS Health Corp., 779 F. App'x. 431, 433 n.2 (9th Cir. 2019). By definition, 5 the Ninth Circuit's decision means the contract language is not clear and unambiguous: It is hornbook 6 law that unambiguous contract terms are decided by courts, not juries. See Coremetrics, Inc. v. Atomic 7 Park.com, LLC, 2005 WL 3310093, at *3 (N.D. Cal. Dec. 7, 2005) ("Interpretation of an unambiguous 8 contract is. . . a question of law."). 9 Because it has been determined as a matter of law that the contract definitions are ambiguous, 10 the Court should preclude Plaintiffs from stating otherwise to the jury. Cf. Arizona v. California, 460 11 U.S. 605, 618 (U.S. 1983) (explaining that the law-of-the-case doctrine "posits that when a court 12 decides upon a rule of law, that decision should continue to govern the same issues in subsequent 13 stages in the same case"). Courts commonly exclude statements that contradict prior legal rulings in 14 the same case. See, e.g., Fahmy v. Jay Z, 2015 WL 5680299, at *10 (C.D. Cal. Sep. 24, 2015) 15 (precluding plaintiff from presenting evidence or argument that would contradict court's prior rulings 16 on applicability of certain legal doctrines); UMG Recordings, Inc. v. Escape Media Grp., 2015 WL 17 1873098, at *4 (S.D.N.Y. Apr. 23, 2015) (noting parties cannot "re-litigate at trial issues that were 18 conclusively determined in the [summary judgment decision]"). 19 Under Rule 403, evidence should be excluded when its probative value, if any, is substantially 20 outweighed by the danger of unfair prejudice or jury confusion. Fed. R. Evid. 403. If Plaintiffs were 21 permitted to argue that the contractual definitions of U&C price clearly and unambiguously include 22 the HSP price, such arguments would tend to mislead and confuse the jury. Incorrect statements of the 23 24 law are inherently misleading, and there is no reason to permit them. 25 The unfair prejudice to CVS from such misstatements would be particularly grave in this case. 26 Consistent with the Ninth Circuit's decision, the jury will be called upon to resolve the ambiguity in 27 the meaning of the definition of usual and customary, weighing the evidence put forward by each side. 28 Any argument that the contracts are "clear and unambiguous" would place a legally incorrect thumb CVS MIL #2: TO PRECLUDE ARGUMENT CASE NO. 15-CV-03504-YGR THAT U&C CONTRACT DEFINITIONS 2 ARE CLEAR OR UNAMBIGUOUS 1 on this scale and would encourage the jurors to disregard the evidence CVS will present in support of 2 its interpretation of these provisions, which have already been held to be ambiguous. 3 For these reasons, CVS requests that the Court preclude Plaintiffs from making any argument 4 or statement to the effect that the U&C definitions in the contracts between CVS and each of 5 Caremark, Express Scripts, Medco, MedImpact, and OptumRx are clear or unambiguous. 6 7 Dated: April 15, 2020 Respectfully submitted, 8 9 By: /s/ Grant A. Geyerman ______________ 10 Enu Mainigi (admitted pro hac vice) 11 Grant A. Geyerman (admitted pro hac vice) WILLIAMS & CONNOLLY LLP 12 725 Twelfth Street, N.W. 13 Washington, DC 20005 Telephone: (202) 434-5000 14 Facsimile: (202) 434-5029 15 16 Edward W. Swanson (Cal. Bar No. 159859) August Gugelmann (Cal. Bar No. 240544) 17 SWANSON & MCNAMARA LLP 300 Montgomery Street, Suite 1100 18 San Francisco, CA 94104 19 Telephone: (415) 477-3800 Facsimile: (415) 477-9010 20 Attorneys for Defendant CVS Pharmacy, Inc. 21 22 23 24 25 26 27 28 CVS MIL #2: TO PRECLUDE ARGUMENT CASE NO. 15-CV-03504-YGR THAT U&C CONTRACT DEFINITIONS 3 ARE CLEAR OR UNAMBIGUOUS