Corcoran et al v. CVS Health Corporation

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

RESPONSE re [444] Notice (Other), Plaintiffs' Opposition to CVS's Proposal for Adjudication of Individualized Issues by Debbie Barrett, Tyler Clark, Robert Garber, Robert Jenks, Darlene McAfee, Stephen Sullivan, Carl Washington.

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Bonny E. Sweeney (Cal. Bar No. 176174) Robert B. Gilmore (admitted pro hac vice) 1 HAUSFELD LLP Edward H. Meyers (admitted pro hac vice) 2 600 Montgomery St., Suite 3200 STEIN MITCHELL BEATO & MISSNER LLP San Francisco, California 94111 901 15th Street, N.W., Suite 700 3 Tel: 415-633-1908 Washington, D.C. 20005 Fax: 415-358-4980 Tel: 202-737-7777 4 Fax: 202-296-8312 5 Richard Lewis (admitted pro hac vice) 6 Sathya S. Gosselin (Cal. Bar No. 269171) HAUSFELD LLP Elizabeth C. Pritzker (Cal. Bar No. 146267) 7 1700 K St. NW, Suite 650 Jonathan K. Levine (Cal. Bar No. 220289) Washington, D.C. 20006 Caroline Corbitt (Cal. Bar No. 305492) 8 Tel: 202-540-7200 PRITZKER LEVINE LLP Fax: 202-540-7201 1900 Powell Street, Suite 450 9 Emeryville, California 94608 10 Tel. 415-692-0772 Fax. 415-366-6110 11 12 13 Class Counsel 14 UNITED STATES DISTRICT COURT 15 NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION 16 Christopher Corcoran, et al., on behalf of Case No. 4:15-cv-03504-YGR-JSC 17 themselves and others similarly situated, Plaintiffs, CLASS ACTION 18 v. 19 PLAINTIFFS' OPPOSITION TO CVS'S CVS Pharmacy, Inc., PROPOSAL FOR ADJUDICATION OF Defendant. INDIVIDUALIZED ISSUES 20 21 Date: May 13, 2020 Time: 9:30 a.m. 22 Courtroom: 1 Judge: Hon. Yvonne Gonzalez Rogers 23 24 25 26 27 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR 1 CVS's "Proposal for Adjudication of Individualized Issues" ("CVS Br.") is in reality simply 2 the defendant's latest effort to revisit and oppose or undo class treatment for this case. Indeed, CVS is 3 not bashful about its objective, once again inviting the Court to reconsider class certification. CVS Br. 4 at 2 n.2. But CVS rehashes class certification issues that this Court, and the Ninth Circuit, have 5 previously resolved. CVS's proposal, like its overly prolix and complicated proposed jury instructions 6 and verdict form, mischaracterizes the issues to be resolved and ignores that this claim has been 7 certified as a class action. This Court should decline CVS's invitation to revisit class certification and 8 inject unwarranted complexity into the trial. 9 CVS concedes that four core issues "are susceptible to proof by common, class-wide evidence 10 [to] be tried before the jury at the August trial: [1] [w]hether Plaintiffs are third-party beneficiaries of 11 the five CVS-PBM contracts; [2] [w]hether CVS breached each of the five CVS-PBM contracts; [3] 12 [w]hether CVS's conduct was "deceptive" or "unfair" under the class states' consumer protection 13 statutes; and [4] [w]hether there was a superseding cause of the plaintiff's injury, such as the pharmacy 14 benefit manager or insurance company's role in determining the plaintiff's copay, such that CVS's 15 conduct was not the proximate cause of injury or harm.1" CVS Br. at 2-3. But CVS is incorrect that 16 the three issues it identifies as "individualized," such that they supposedly warrant separate 17 adjudication, are anything of the sort. 18 First, "[w]hether CVS's conduct vis-à-vis each member of the Florida and Massachusetts class 19 qualifies as 'unfair' for purposes of those statutes' definitions of the term," CVS Br. at 3, can be 20 resolved class-wide. As the Court observed at the November 12, 2019 hearing, CVS could not identify 21 elements of the different states' UDAP laws that made a class trial unmanageable. Dkt. No. 407, Order 22 at 14. And courts have rejected CVS's argument that unfair business practice claims under the Florida 23 and Massachusetts UDAP statutes cannot be resolved class-wide.2 24 1 As explained in Plaintiffs' position statements for the proposed jury instructions, which are being filed contemporaneously with this brief, Plaintiffs dispute CVS's characterization of these four issues 25 and whether they require separate instructions to the jury. Plaintiffs agree, however, that these issues are susceptible to class-wide proof. 26 2 For the Florida DUTPA, courts have endorsed class certification on the ground that an "intentional 27 overcharge … is an unfair and deceptive trade practice" even though "the consumers clearly were 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR-JSC 1 1 Second, there is no basis for individualized adjudication of "the individual class member's 2 knowledge and awareness of the HSP program, the HSP price, and/or how their insurance copayments 3 were determined[.]" CVS Br. at 4. As this Court found at the beginning of the case, "[t]he gravamen 4 of the SAC is not that CVS concealed the existence of the HSP program. Rather, it is that CVS 5 deceived Plaintiffs by reporting U & C prices significantly above the prices available to members of 6 the HSP program, and then charged Plaintiffs inflated copays of a result of their deceitful practice." 7 Corcoran v. CVS Health Corp., 169 F. Supp. 3d 970, 987 (N.D. Cal. 2016). In later granting class 8 certification, the Court again reiterated that class members' awareness of the HSP program—"even 9 those who were members of HSP"—did not mean they "knew of the allegedly deceptive practices" 10 because the "copayment adjudication process from the perspective of the consumer is opaque" and 11 that class members "likely did not understand the relationship between the pharmacy's U&C and what 12 the pharmacy charges them, which may be at times less than or more than the HSP program prices." 13 2017 WL 3873709, at *7 (N.D. Cal. Sept. 5, 2017). Furthermore, CVS admits it did not inform 14 Plaintiffs that it was charging them inflated copayments (by excluding its HSP prices from its 15 submitted U&C prices), and admits it has no evidence it informed anyone that CVS and any PBM 16 agreed CVS could do so.3 17 18 19 willing to pay the price charged" and "nor would it make a difference that the consumers paid no attention to" the overcharged amount. Latman v. Costa Cruise Lines, N.V., 758 So. 2d 699, 703 (Fla. 20 3d DCA 2000) (emphasis added). See also W.S. Badcock Corp. v. Myers, 696 So. 2d 776, 778–79 (Fla. 1st DCA 1996) (class certified under FDUTPA for claim that Badcock impermissibly charged 21 consumers a seven dollar non-filing fee in connection with purchases of consumer goods it sold and financed); Execu–Tech Business Sys. Inc. v. New Oji Paper Co., Ltd., 752 So.2d 582 (Fla. 2000) (class 22 action under FDUTPA to recover damages for price fixing). The same is true for Massachusetts' 23 UDAP law. See De Giovanni v. Jani-King Int'l, Inc., 262 F.R.D. 71, 84 (D. Mass. 2009) ("A fact- finder can determine for all class members whether the amount or types of fees charged by Jani–King 24 are inherently unfair under Chapter 93A.") (emphasis added); In re Pharm. Indus. Average Wholesale Price Litig., 491 F. Supp. 2d 20, 94 (D. Mass. 2007), aff'd 582 F.3d 156 (1st Cir. 2009) 25 (pharmaceutical companies' inflated pricing gave rise to class-wide unfair business practice claims under Chapter 93A). 26 3 27 Dkt. No. 272-25, May 10, 2017 CVS 1st Suppl. Resps. To Pls.' Reqs. for Admission Nos. 58-59, 116. 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR-JSC 2 1 Given that class members' awareness of the HSP program or the technical details of the copay 2 process has little to no relevance to the claims in the case, CVS's proposal for an entirely separate 3 individualized process to explore this issue is nothing but a disguised motion to decertify the class. 4 And the elements/defenses for which CVS asserts these issues—causation, reliance, and statute of 5 limitations—are ones that the Court already determined could be resolved class-wide and did not 6 defeat certification. See id.; see also Corcoran v. CVS Health Corp., 15-cv-03504-YGR-JSC, 2019 7 WL 6250972, at *5 (N.D. Cal. Nov. 22, 2019) (finding that CVS made "no actual showing that [the 8 class representatives] are uniquely subjected to the statute of limitations" and that the class members 9 are "likely to be subjected to the same statute of limitations defense") (emphasis in original). 10 Third, "[w]hether (i) the class member had (and reached) an out-of-pocket maximum in the 11 year in which his or her at-issue purchase was made or (ii) was reimbursed by a third-party payor for 12 the copayment, which bear on the presence of injury and, assuming there is an injury, the appropriate 13 amount of damages," CVS Br. at 4, also is irrelevant and does not require an individualized 14 proceeding. CVS is arguing that another entity—class members' insurers—ended up covering some 15 portion of CVS's overcharges, and that therefore class members either suffered no damages or that 16 their damages cannot be calculated uniformly. But the collateral source rule prevents CVS from 17 disputing Plaintiffs' evidence of class-wide damages by pointing to a third-party entity, the insurer, as 18 supposedly having footed the bill for part of CVS's overcharges to class members. "[B]enefits received 19 by the plaintiff from a source collateral to the defendant may not be used to reduce that defendant's 20 liability for damages." 1 DAN B. DOBBS, LAW OF REMEDIES § 3.8(1) at 372–73 (2d ed. 1993). See also 21 Siverson v. United States, 710 F.2d 557, 560 (9th Cir. 1983); Henderson v. Peterson, No. C 07-2838 22 SBA, 2011 WL 2838169, *4-5 (N.D. Cal. July 15, 2011).4 Courts in this district and elsewhere have 23 held that the collateral source rule applies in cases involving consumers who were overcharged for 24 4 25 In addition, "[p]rior to healthcare reform [introduced by the Affordable Care Act in 2014], copays at the doctor or pharmacist did not count toward your deductible or out-of-pocket maximum." Ex. 53, 26 Aug. 18, 2014 Article, Do copays count toward the out-of-pocket maximum? The deductible? available at 27 pocket-maximum-The-deductible. Thus, CVS's argument does not even apply to nearly the entire class period (2008-2013). 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR-JSC 3 1 prescriptions when using insurance. See In re Abbott Labs. Norvir Anti-Tr. Litig., No. C 04-1511 CW, 2 2007 WL 1689899, at *3 (N.D. Cal. June 11, 2007); In re Warfarin Sodium Antitrust Litig., 212 F.R.D. 3 231, 259 (D. Del. 2002); Goda v. Abbott Labs, No. Civ. A. 01445-96, 1997 WL 156541 (D.C. Sup. 4 Ct. Feb. 3, 1997). Whether an insurer ended up covering (directly or indirectly) overcharges to its 5 insured class members is of no concern of CVS's and certainly does not immunize the company from 6 its wrongful conduct. CVS's requested relief ignores the specifics of this Court's prior class 7 certification order and otherwise lacks merit under the collateral source doctrine. 8 The cases that CVS cites are wholly distinguishable and provide it no support, as they deal 9 with different issues and arise in different contexts from this case: either in class certification or in a 10 post-trial challenge to a court's bifurcation order. For example, In re Asacol Antitrust Litigation 11 involved large numbers of absent class members (estimated at 10% of the total class by the district 12 court) who were uninjured, for a variety of reasons, such as class members having "no record of 13 purchasing" the drugs at issue there, or having "had no co-pay, and therefore were not price sensitive." 14 907 F.3d 42, 51, 53 (1st Cir. 2018).5 Here, in contrast, every class member is included in the class 15 because Plaintiffs' economics expert, Dr. Joel Hay, has used CVS's transaction data to verify that the 16 class member was overcharged on at least one out of pocket payment for an HSP-eligible prescription. 17 Jinro Am. Inc. v. Secure Investments, Inc. involved the district court's decision in a breach of 18 contract case to have the jury first decide whether valid and enforceable contracts existed. 266 F.3d 19 993, 998 (9th Cir. 2001). That sort of bifurcation is not the relief CVS is seeking in this motion. Rather, 20 CVS is challenging the underlying class certification ordered in this case and trying to revisit an 21 argument it has already lost: that issues of liability and causation/damages are inextricably bound 22 23 5 24 In any event, a number of district courts have sharply criticized Asacol's reasoning for reversing certification, including in two opinions that CVS itself cites. In re EpiPen Mktg., Sales Practices & 25 Antitrust Litig., MDL No. 2785, 2020 WL 1180550, at *32 (D. Kan. Mar. 10, 2020); In re Loestrin 24 FE Antitrust Litig., 410 F. Supp. 3d 352, 404 (D.R.I. 2019); In re Intuniv Antitrust Litig., No. 1:16-cv- 26 12396-ADB, 2019 WL 3947262, at *7 n.8 (D. Mass. Aug. 21, 2019). And as the Ninth Circuit has held, "even a well-defined class may inevitably contain some individuals who have suffered no harm 27 as a result of a defendant's unlawful conduct." Torres v. Mercer Canyons, Inc., 835 F.3d 1125, 1136 (9th Cir. 2016). 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR-JSC 4 1 together and can be resolved on a class-wide basis because they both turn on class-wide evidence, 2 such as the uniform CVS-PBM contract language and CVS's transaction data. 3 The remaining cases that CVS cites involved individualized damages issues (mainly in the 4 personal injury context) and class certification issues that have either been resolved or simply are not 5 present here. In re Copley Pharmaceutical, Inc., where the district court denied the defendant's motion 6 for decertification, involved product liability claims arising from a tainted medication and the variety 7 of individualized medical issues those sorts of claims pose for causation and damages. 161 F.R.D. 8 456, 458 (D. Wyo. 1995). Sterling v. Velsicol Chemical Corp. involved a bifurcated proceeding to 9 adjudicate individualized personal injury harms from exposure to polluted groundwater. 855 F.2d 10 1188, 1200 (6th Cir. 1988). In re Methyl Tertiary Butyl Ether Prods. Liab. Litig. also involved 11 contaminated groundwater and a mix of personal injury and property damage claims. 209 F.R.D. 323, 12 352–53 (S.D.N.Y. 2002). Hilao v. Estate of Marcos was a sprawling, sui generis class action involving 13 a variety of groups of plaintiffs with different sorts of wrongful death and torture claims against the 14 former Filipino dictator's estate. 103 F.3d 767 (9th Cir. 1996). Kamakahi v. American Society for 15 Reproductive Medicine bifurcated liability and damages for purposes of certification only because the 16 calculation of damages required highly individualized inquiries. 305 F.R.D. 164, 194 (N.D. Cal. 2015). 17 None of these sorts of individualized harm issues are present in this case, however, where the 18 claims all are for economic injury resulting from a single course of conduct and harm that applies 19 class-wide: CVS's overcharging class members by not reporting the HSP price, and the uniform, 20 arithmetic calculation of damages, using CVS's transaction data, arising from that class-wide conduct. 21 As this Court found, "[P]laintiffs' damages calculations are tied to the delta between what [P]laintiffs 22 were charged by [CVS] and [CVS's] true U&C price, which [P]laintiffs allege is the HSP program 23 price for each drug." Corcoran, 2017 WL 3873709, at *8. That does not depend on individualized 24 circumstances. Indeed, the Ninth Circuit reiterated the uniform nature of Plaintiffs' and class 25 members' claims and harm: 26 The named plaintiffs and the absent class members are insured customers who were 27 charged copayments higher than the HSP prices, which plaintiffs maintain should 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR-JSC 5 have been CVS's actual U & C prices. As a result, the named plaintiffs were injured 1 in the same manner as the absent class members and they suffered the same type of 2 damages, i.e., the delta between the actual copayment and the HSP price. … While plaintiffs' motion for class certification focused on CVS's agreements with five 3 PBMs, the alleged overall conduct or scheme was the same. That is, plaintiffs alleged that insured CVS customers were charged higher copayments as a result of 4 CVS's failure to report its actual U & C prices in accordance with its agreements with the PBMs. The district court did not identify any meaningful differences in the 5 PBM agreements …. 6 779 F. App'x 431, 434 (9th Cir. 2019). 7 CVS's motion largely tries to rehash arguments already presented to, and rejected by, this 8 Court and the Ninth Circuit. This Court certified a class after considering and rejecting CVS's similar 9 arguments; that order was appealed by Plaintiffs but, notably, not cross-appealed by CVS; the Ninth 10 Circuit broadened the certification; and this Court rejected CVS's request for further briefing on class 11 certification and then certified two additional state classes. There is no basis for CVS to demand yet 12 another chance to undo class treatment for this case. Plaintiffs respectfully submit that the Court should 13 reject CVS's proposal. 14 Dated: May 5, 2020 Respectfully submitted, 15 By: /s/ Elizabeth C. Pritzker By: /s/ Robert Gilmore 16 Robert B. Gilmore (admitted pro hac vice) Elizabeth C. Pritzker (Cal. Bar No. 146267) Jonathan K. Levine (Cal. Bar No. 220289) Edward H. Meyers (admitted pro hac vice) 17 Caroline C. Corbitt (Cal. Bar No. 305492) STEIN MITCHELL BEATO & MISSNER LLP 18 PRITZKER LEVINE LLP 19 By: /s/ Bonny Sweeney Bonny E. Sweeney (Cal. Bar No. 176174) 20 Richard Lewis (admitted pro hac vice) 21 Sathya S. Gosselin (Cal. Bar No. 269171) HAUSFELD LLP 22 23 24 25 26 27 28 PLS.' OPP. TO CVS BR. RE INDIV. ISSUES CASE NO. 4:15-CV-03504-YGR-JSC 6