Star Discount Pharmacy, Inc et al v. MedImpact Healthcare Systems, Inc et al

Filing 154

MEMORANDUM OPINION. Signed by Judge Abdul K Kallon on 9/10/2014. (PSM)

FILED
2014 Sep-10 PM 02:00
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
STAR DISCOUNT
PHARMACY, INC., et al.,
Plaintiffs,
v.
MEDIMPACT HEALTHCARE
SYSTEMS, INC., et al.,
Defendants.

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Civil Action Number
5:11-cv-02206-AKK

MEMORANDUM OPINION
Plaintiffs Star Discount Pharmacy, Inc., Propst Discount Drugs, Inc., C & H
Pharmacy, Inc., and Darden Heritage pursue this claim against MedImpact Healthcare
Systems, Inc., Michael Struhs, and Nicole Adams for violation of the Racketeer
Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962, violation of
Alabama’s antitrust laws, Ala. Code. §§ 6-5-60 and 8-10-1, et seq., and negligence,
wantonness, unjust enrichment, and intentional interference with a business
relationship, pursuant to Alabama common law. The defendants move for summary
judgment on all of the plaintiffs’ claims, doc. 113, and the motion is fully briefed and
ripe for review, docs. 115, 123, and 125. Additionally, the defendants move to strike
the plaintiffs’ supplemental evidentiary submissions, doc. 130, and that motion is

Page 1 of 24

fully briefed as well, docs. 132 and 133. Based on a review of the evidence and the
law, the court finds that the plaintiffs have failed to present sufficient evidence to
support their RICO, antitrust, and unjust enrichment claims and, consequently, the
defendants’ motion for summary judgment on those claims is due to be granted.
Because

the

plaintiffs’

remaining negligence,

wantonness,

and intentional

interference with a business relationship claims are governed by Alabama law, the
court will remand those claims to the Circuit Court of Madison County, Alabama.
I. SUMMARY JUDGMENT STANDARD OF REVIEW
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment
is proper “if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” “Rule 56[] mandates the
entry of summary judgment, after adequate time for discovery and upon motion,
against a party who fails to make a showing sufficient to establish the existence of an
element essential to that party’s case, and on which that party will bear the burden of
proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (alteration in
original). The moving party bears the initial burden of proving the absence of a
genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving
party, who is required to “go beyond the pleadings” to establish that there is a
“genuine issue for trial.” Id. at 324 (citation and internal quotation marks omitted).
A dispute about a material fact is genuine “if the evidence is such that a reasonable
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jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986).
The court must construe the evidence and all reasonable inferences arising from
it in the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co.,
398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255 (all justifiable
inferences must be drawn in the non-moving party’s favor). Any factual disputes will
be resolved in the non-moving party’s favor when sufficient competent evidence
supports that party’s version of the disputed facts. See Pace v. Capobianco, 283 F.3d
1275, 1276, 1278 (11th Cir. 2002) (a court is not required to resolve disputes in the
non-moving party’s favor when that party’s version of events is supported by
insufficient evidence). However, “mere conclusions and unsupported factual
allegations are legally insufficient to defeat a summary judgment motion.” Ellis v.
England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain
Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Moreover, “[a] mere
‘scintilla’ of evidence supporting the opposing party’s position will not suffice; there
must be enough of a showing that the jury could reasonably find for that party.”
Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S.
at 252)).

Page 3 of 24

II. FACTUAL ALLEGATIONS
The following is an account of the facts necessary to resolve the present matter
viewed in a light most favorable to the plaintiffs.1 Alabama’s Public Education
Employees’ Health Insurance Plan (“PEEHIP”) provides health insurance benefits to
the state’s public educators. Doc. 1-1 at 3. In early 2010, “defendant MedImpact2
entered into an agreement to serve as the third party administrator . . . of PEEHIP’s
prescription medication program.” Id.

Subsequently, MedImpact “began directly

contacting pharmacies and requesting that the pharmacies enter into specific contracts
[for reimbursement] with MedImpact.” Id. at 4. Many Alabama pharmacy networks,
ranging from major chains to independent associations, agreed to the terms of these
contracts by August 2010. Doc. 152-6 *SEALED* at 65–80. MedImpact assumed the
duties of administering the PEEHIP network on October 1, 2010. Doc. 129-5
*SEALED* at 109.
The plaintiffs in this lawsuit are Darden Heritage and the pharmacies he owns
and operates in Madison County, Alabama. Doc. 1-1 at 2. In the fall of 2010,
MedImpact extended contract terms to the plaintiffs’ pharmacy association, American

1

As explained above, a “court shall grant summary judgment if the movant shows that
there is not genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a) (emphasis added). A fact is material if it “might affect the
outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248
(1986).
2

Defendants Struhs and Adams are employees of MedImpact. Doc. 1-1 at 3.
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Pharmacy Network Solutions (“APNS”), which APNS declined. Doc. 152-6
*SEALED* at 81–85. MedImpact and APNS ultimately reached a temporary
agreement that allowed APNS pharmacies, including the plaintiffs’ pharmacies, to
continue servicing PEEHIP beneficiaries until January 1, 2011. Id. at 93. MedImpact
and APNS were unable to reach a long-term agreement during their 2010
negotiations, id. at 96, and on December 7, 2010, the PEEHIP Board voted to remove
APNS from its retail pharmacy network, effective January 1, 2011, doc. 129-75
*SEALED* at 1–2. In December 2010, anticipating the January 1, 2011 cutoff,
MedImpact sent a letter to the plaintiffs’ patients explaining that all Alabama
pharmacies except those affiliated with APNS agreed to MedImpact’s reimbursement
rates and that the rates demanded by APNS were approximately twenty-five percent
more expensive to PEEHIP than those demanded by other pharmacy networks. The
letter directed the patients to nearby pharmacies in the PEEHIP network. Id.
After the 2010 negotiations between MedImpact and APNS failed, many APNS
member pharmacies contracted directly with MedImpact to continue serving PEEHIP
beneficiaries. See, e.g., doc. 152-11 *SEALED* at 1–9. On December 28, 2010,
MedImpact extended contract terms to Heritage, who rejected them. Doc. 152-4
*SEALED* at 122. MedImpact again extended contract terms to Heritage on
February 14, 2011. Id. at 126. Via an email written by his attorney on February 18,
2011, Heritage indicated he was willing to negotiate with MedImpact, id. at 135, but,
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according to the plaintiffs, MedImpact failed to respond, doc. 129-71 *SEALED* at
67–68.
The contract between PEEHIP and MedImpact contains the following
provision:
Direct Member Reimbursement (“DMR”). MedImpact or Client shall
provide an Eligible Member with a MedImpact (and Client approved) claim
form for use for submitting non-electronic Claims for reimbursement for
Covered Benefits provided by a Participating or non-Participating Pharmacy.
When such a Claim is submitted on the approved form, MedImpact shall
process the Claim according to the Eligible Member’s Benefit Plan and in the
amount agreed to by the Client for payment, and payment will be made to the
Eligible Member by MedImpact as required by applicable Law.
Doc. 129-6 *SEALED* at 13. After PEEHIP removed APNS from its network,
Heritage encouraged his customers to pay full price for their prescription medication
and then seek reimbursement from MedImpact via DMR. Doc. 129-65 *SEALED*
at 20–21. Although it appears that MedImpact briefly reimbursed the plaintiffs’
patients who submitted DMR requests, it soon began refusing to do so.3 Id. at 22, 44,
64. Additionally, MedImpact sent letters to the plaintiffs’ patients who sought
reimbursement via DMR explaining that “the PEEHIP prescription drug plan has
always had an exclusion to disallow drug coverage if members use a nonparticipating pharmacy in the state of Alabama even if they file a paper claim,” and
3

In a January 26, 2011 letter, PEEHIP counsel explained to the plaintiffs’ counsel that the
DMR provision of the PEEHIP–MedImpact contract “states that ‘MedImpact shall process the
Claim according to the Eligible Member’s Benefit Plan,” and that “[t]he PEEHIP
Hospital/Medical plan document . . . states that ‘[i]n Alabama, benefits are only for prescriptions
purchased from Participating Pharmacies.’” Doc. 129-68 at 111 (emphasis in the original).
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that “the PEEHIP plan will no longer be able to reimburse you for future prescriptions
filled at non-participating Alabama pharmacies.” Doc. 129-6 at 117. The letter also
contained instructions for locating nearby participating pharmacies. Id.
On June 8, 2011, after the plaintiffs initiated this lawsuit4 , APNS reached an
agreement with MedImpact. Doc. 152-6 *SEALED* at 98. The plaintiff pharmacies,
who were still members of APNS, received the opportunity to participate under the
APNS–MedImpact contract, but declined and withdrew from APNS on June 9, 2011.
Doc. 152-4 *SEALED* at 67–68; id. at 136–37.
III. ANALYSIS
The plaintiffs allege claims pursuant to the RICO act and Alabama law for
antitrust violations, negligence, wantonness, unjust enrichment, and intentional
interference with a business relationship. The defendants contend they are due
summary judgment on all of the plaintiffs’ claims. The court will examine each claim
in turn.
A. The plaintiffs’ RICO claim
In Count Five, the plaintiffs allege that the defendants engaged in a pattern of
racketeering activity in furtherance of a “scheme to create a closed and[/]or limited
access network of pharmacies in contravention of Alabama Law, in restraint of trade,

4

On May 24, 2011, the plaintiffs filed suit in the Circuit Court of Madison County,
Alabama. Doc. 1 at 1. The defendants subsequently removed the matter to this court on June 23,
2011. Id.
Page 7 of 24

and in an effort to control the provision of pharmaceutical services and prescription
medications to [PEEHIP] beneficiaries,” in violation of the RICO Act. Doc. 1-1 at 8,
11–12.
[T]o state a prima facie civil RICO claim under 18 U.S.C. § 1964(c), a
plaintiff must establish three essential elements: first, that the defendant
committed a pattern of RICO predicate acts under 18 U.S.C. § 1962; second,
that the plaintiff suffered injury to business or property; and, finally, that the
defendant’s racketeering activity proximately caused the injury.
Simpson v. Sanderson Farms, Inc., 744 F.3d 702, 705 (11th Cir. 2014) (citing Holmes
v. Secs. Investor Prot. Corp., 503 U.S. 258, 265–68 (1992); Avirgan v. Hull, 932 F.2d
1572, 1577 (11th Cir.1991)). The defendants argue that they are due summary
judgment on the RICO claim because the plaintiffs have failed to present sufficient
evidence of causation. Doc. 115 at 40. As a preliminary matter, except for broad
assertions regarding causation in the opposition brief, the court notes that the
plaintiffs have failed to cite a single piece of evidence to rebut the defendants’
argument concerning causation.5 Doc. 123 at 44. This failure is fatal to their claim
because:
the plain language of Rule 56[] mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who fails to make
a showing sufficient to establish the existence of an element essential to that
party’s case, and on which that party will bear the burden of proof at trial. In
such a situation, there can be no genuine issue as to any material fact, since a

5

The court cannot consider the contentions in the brief because “statements by counsel in
briefs are not evidence.” Skyline Corp. v. Nat’l Labor Relations Bd., 613 F.2d 1328, 1337 (5th
Cir. 1980).
Page 8 of 24

complete failure of proof concerning an essential element of the nonmoving
party’s case necessarily renders all other facts immaterial. The moving party
is entitled to a judgment as a matter of law because the nonmoving party has
failed to make a sufficient showing on an essential element of her case with
respect to which she has the burden of proof.
Celotex, 477 U.S. at 322–23. Consequently, the defendants are entitled to summary
judgment for this reason alone.6
Even were the court to consider the plaintiffs’ unsupported arguments
concerning causation, summary judgment would still be due on the RICO claims.
“[T]o state a claim under civil RICO, the plaintiff is required to show that a RICO
predicate offense ‘not only was a “but for” cause of his injury, but was the proximate
cause as well.’” Hemi Grp., LLC v. City of New York, N.Y., 559 U.S. 1, 9 (2010)
(quoting Holmes, 503 U.S. at 268). “When a court evaluates a RICO claim for
proximate causation, the central question it must ask is whether the alleged violation
led directly to the plaintiff’s injuries.” Anza v. Ideal Steel Supply Corp., 547 U.S. 451,
461 (2006).
The Supreme Court’s seminal case regarding RICO’s causation requirements
is Holmes v. Securities Investor Protection Corp. In Holmes, the plaintiff, a non-

6

Were the plaintiffs to argue that support for their RICO claim is buried in the 6,500-plus
pages of documents they filed in support of their opposition to the defendants’ motion for
summary judgment, the court’s decision would remain unchanged. “There is no burden upon the
district court to distill every potential argument that could be made based upon the materials
before it on summary judgment.” Resolution Trust Corp. v. Dunmar Corp., 43 F.3d 587, 599
(11th Cir. 1995) (citing Blue Cross & Blue Shield v. Weitz, 913 F.2d 1544, 1550 (11th
Cir.1990)). “Rather, the onus is upon the parties to formulate arguments.” Id. (citing Rd Sprinkler
Fitters Local Union No. 669 v. Indep. Sprinkler Corp., 10 F.3d 1563, 1568 (11th Cir. 1994)).
Page 9 of 24

profit entity that functions as an insurer designed to protect the customers of its
member broker-dealers in the event of a member’s financial failure, filed a RICO
action against the defendant, alleging that the defendant “conspired in a
stock-manipulation scheme that disabled two broker-dealers from meeting obligations
to customers, thus triggering [the plaintiff’s] statutory duty to advance funds to
reimburse the customers.” 503 U.S. at 261. While the Court acknowledged that the
language of 18 U.S.C. § 1964 “can, of course, be read to mean that a plaintiff is
injured ‘by reason of’ a RICO violation, and therefore may recover, simply on
showing that the defendant violated § 1962, the plaintiff was injured, and the
defendant’s violation was a “but for” cause of plaintiff's injury,” id. at 265–66, the
Court noted that the statutory and legislative history supported the premise that the
plaintiff must establish proximate causation as well. Id. at 267–68. Consequently, to
succeed on a RICO claim, a plaintiff must show “some direct relation between the
injury asserted and the injurious conduct alleged.” Id. at 268.
Turning to the facts before it, the Holmes Court rejected the plaintiff’s RICO
claim because the plaintiff failed to prove that the defendant proximately caused its
injury. Even allowing the plaintiff to stand in the shoes of the broker-dealers’
customers, the Court reasoned that
the link is too remote between the stock manipulation alleged and the
customers’ harm, being purely contingent on the harm suffered by the
broker-dealers. That is, the conspirators have allegedly injured these customers
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only insofar as the stock manipulation first injured the broker-dealers and left
them without the wherewithal to pay customers’ claims.
Id. at 271. The Court further explained that the facts of Holmes illustrated one of the
rationales for a strict causation requirement in the RICO context:
If the . . . customers were allowed to sue, the district court would first need to
determine the extent to which their inability to collect from the broker-dealers
was the result of the alleged conspiracy to manipulate, as opposed to, say, the
broker-dealers’ poor business practices or their failures to anticipate
developments in the financial markets.
Id. at 272–73.
Subsequent Supreme Court cases have reinforced the Court’s holding in
Holmes. In Anza v. Ideal Steel Supply Corp., the parties operated competing stores
that sold steel products. 547 U.S. at 453–54. The plaintiff contended that the
defendants “adopted a practice of failing to charge the requisite New York sales tax
to cash-paying customers, even when conducting transactions that were not exempt
from sales tax under state law. This practice allowed [the defendants] to reduce [their]
prices without affecting [their] profit margin” id. at 454, thereby gaining a
competitive edge over the plaintiff, id. at 455. The plaintiff further contended that the
defendants “submitted fraudulent tax returns to the New York State Department of
Taxation and Finance in an effort to conceal their conduct.” Id. As in Holmes, the
Anza Court found that proximate cause was lacking. Id. at 458. The Court noted that
the alleged predicate RICO violations were wire and mail fraud, which the defendants
purportedly committed by filing fraudulent tax returns with the State of New York,
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and that, as such, “[t]he direct victim of this conduct was the State of New York, not”
the plaintiffs. Id. As in Holmes, the facts of Anza illustrate how the Court’s direct
causation requirement spares courts the difficulty of “ascertain[ing] damages caused
by some remote action.” Id. As the Court put it,
The injury [the plaintiff] alleges is its own loss of sales resulting from [the
defendants’] decreased prices for cash-paying customers. [The defendants],
however, could have lowered [their] prices for any number of reasons
unconnected to the asserted pattern of fraud. [They] may have received a cash
inflow from some other source or concluded that the additional sales would
justify a smaller profit margin. [Their] lowering of prices in no sense required
it to defraud the state tax authority. Likewise, the fact that a company commits
tax fraud does not mean the company will lower its prices; the additional cash
could go anywhere from asset acquisition to research and development to
dividend payouts.
Id. at 458–59.
Similarly, in Hemi Group, LLC v. City of New York, N.Y., in which the City of
New York pursued a RICO action against an out-of-state cigarette vendor, the Court
once again found the plaintiffs failed to establish proximate cause. 559 U.S. at 5, 12.
The City imposes a $1.50 per pack tax on cigarettes. Id. at 5. The City is responsible
for recovering that tax directly from customers who purchase cigarettes from out-ofstate vendors, such as the defendant. Id. The Jenkins Act “requires out-of-state
cigarette sellers to register and file a report with state tobacco tax administrators
listing the name, address, and quantity of cigarettes purchased by state residents.” Id.
State officials then provide that information to the City. Id. The City contended that
the defendants’ failure to file Jenkins Act information with the state cost the City
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millions of dollars in tax revenue per year. Id. The Court, however, found that the
City’s theory of causation was too attenuated to constitute proximate cause. Id. at 11.
Noting that “the conduct directly responsible for the City’s harm was the customers’
failure to pay their taxes[, a]nd the conduct constituting the alleged fraud was [the
defendant’s] failure to file Jenkins Act reports,” the Court refused to “stretch[] the
causal chain of a RICO violation” to encompass a “situation[] where the defendant’s
fraud on the third party (the State) has made it easier for a fourth party (the taxpayer)
to harm the plaintiff (the City).” Id. at 11.
Here, the parties are in agreement that the loss of PEEHIP customers was the
harm suffered by the plaintiffs. Doc. 115 at 39; doc. 123 at 44. Not surprisingly, that
is where their agreement ends. The defendants contend that Heritage’s refusal to
contract with MedImpact caused the loss of PEEHIP customers. Doc. 115 at 41. The
defendants are correct that under their theory, causation is lacking because Heritage,
not MedImpact, directly caused the loss of the plaintiffs’ PEEHIP customers.7 The
plaintiffs, however, seem to contend that three distinct actions caused the loss of their
PEEHIP customers8 : 1) the December 7, 2010 PEEHIP Board vote to remove APNS

7

Additionally, rejecting a contract is not a predicate act as defined by 18 U.S.C. §

1961(1).
8

In their complaint, the plaintiffs identified the predicate acts giving rise to their RICO
claim as “mail fraud, wire fraud, interference with the operation of employee benefit plans,
and/or extortion.” Doc. 1-1 at 11. The court is not convinced that any of the supposed predicate
acts described by the plaintiffs constitute mail fraud, wire fraud, or extortion. Additionally, the
court can find no authority supporting the notion that interference with the operation of an
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from its retail pharmacy network9 ; 2) MedImpact’s December 2010 mailing to APNS
customers directing them to in-network pharmacies; and 3) MedImpact’s refusal to
reimburse plaintiffs’ patients who submitted DMR requests and mailing informing
those customers that MedImpact would not reimburse them for prescriptions filled at
non-participating pharmacies. Doc. 123 at 44. As a preliminary matter, this third
purported predicate act cannot support the plaintiffs’ RICO claim because the people
who were directly harmed by MedImpact’s refusal to honor DMR requests were the
plaintiffs’ patients, who had paid full price for their prescriptions and were left
holding the bag, as it were. See Anza, 547 U.S. at 458–59 (rejecting a similar
scenario). More to the point, after considering the parties’ arguments as a whole, it
is clear that it is impossible to isolate an individual act as the direct cause of the loss
of the plaintiffs’ PEEHIP customers. Rather, a number of events and decisions
culminated in the loss of these customers. At least two of these decisions—Heritage’s
rejection of the December 28, 2010 contract terms extended by MedImpact and his
June 2011 refusal to participate in the APNS–MedImpact contract and the plaintiffs’
subsequent withdrawal from APNS—were made by Heritage. Finding the existence

employee benefit plan is a predicate act as defined by 18 U.S.C. § 1961(1); c.f. 18 U.S.C. § 1961
(listing embezzlement from an employee benefit plan as defined by 18 U.S.C. § 664 as a predicate
act for RICO purposes).
9

In spite of the plaintiffs’ attempts to insinuate that MedImpact executives tricked the
PEEHIP board into voting to remove APNS from PEEHIP’s network, doc. 123 at 21-22, 44, the
board’s vote cannot be the requisite predicate act for the plaintiffs’ RICO claim because it was
committed by the PEEHIP board, not the defendants.
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of proximate cause under these circumstances would require the court to string
together a series of events similar to the approach rejected by the Hemi Court,
apportion responsibility in the manner considered and rejected by the Holmes Court,
and to ignore Heritage’s role in losing his pharmacies’ PEEHIP customers, a
deviation from RICO jurisprudence that this court is unwilling to make.
In sum, because the plaintiffs failed to present the court with any evidence
supporting their RICO claim, or, in the alternative, because the plaintiffs’ theory
regarding proximate cause fails as a matter of law, the defendants’ motion for
summary judgment as to the RICO claim is due to be granted.
B. The plaintiffs’ antitrust claims
In Count Six, the plaintiffs contend that the “defendants created, devised, and
implemented a plan and/or scheme to limit the provision of pharmaceutical services
and prescription medications within the State of Alabama,” in violation of Alabama’s
antitrust laws, Ala. Code. §§ 6-5-60 and 8-10-1, et seq. Doc. 1-1 at 15. While the
plaintiffs’ claim is based on Alabama law, “[u]nder Alabama law, federal antitrust law
‘prescribe[s] the terms of unlawful monopolies and restraints of trade as they should
. . . be administered in Alabama.’” City of Tuscaloosa v. Harcros Chems., Inc., 158
F.3d 548, 555 (11th Cir. 1998) (citing Ex parte Rice, 67 So. 2d 825, 829 (Ala. 1953)).
Consequently, the plaintiffs’ antitrust claims are governed by federal law.

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The plaintiffs claim that the defendants violated Sections One and Two of the
Sherman Act, 15 U.S.C. §§ 1, 2. Doc. 123 at 45–47. To establish a claim under either
section, a plaintiff must produce evidence of harm to competition. See Spanish Broad.
Sys. of Fla., Inc. v. Clear Channel Commc’ns, Inc., 376 F.3d 1065, 1075 (11th Cir.
2004) (“As with Section One claims, conduct that injures individual firms rather than
competition in the market as a whole does not violate Section Two.”). The defendants
contend the plaintiffs have failed to meet this burden. Moreover, the defendants
present the court with the following excerpt from Heritage’s deposition, in which he
appears to admit that competition between Madison County pharmacies has increased
since MedImpact began administering PEEHIP:
Q: So do you have more competition now than you had in 2010 or less
competition?
A: If you consider the whole Madison County area, we would—I would say
yes, but not any that’s within close proximity to any of my stores, no.
Q: But in Madison County as a whole, there is more competition now?
A: There is in Madison County as a whole, yes.
Doc. 152-6 *SEALED* at 16–17.
In response, the plaintiffs fail to cite a single piece of evidence accounting for
Heritage’s statement or indicating that the defendants harmed competition between
pharmacies in Alabama. See doc. 123 at 45–47. The plaintiffs wanly attempt to gloss
over this deficit by stating that “[a]t the pleading stage, a plaintiff may satisfy the
unreasonable-restraint [of competition] element by alleging that the conspiracy
produced anticompetitive effects in the relevant markets,” id. at 47 (quoting W. Penn
Page 16 of 24

Allegheny Health Sys., Inc. v. UPMC, 627 F.3d 85, 100 (3d Cir. 2010)), and citing to
a case where this court purportedly “held a similar scenario satisfied the consumerinjury requirement and survived a motion to dismiss,” id. (citing N. Jackson
Pharmacy, Inc. v. Express Scripts, Inc., 345 F. Supp. 2d 1279, 1291–92 (N.D. Ala.
2004)). The plaintiffs are well aware that, after three years of litigation (including a
motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), which the plaintiffs largely
survived, see doc. 12), this matter is well past the pleading stage and, unlike at the
pleading stage, where “a judge ruling on a defendant’s motion to dismiss a complaint
‘must accept as true all of the factual allegations contained in the complaint,’” Bell
Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (citing Swierkiewicz v. Sorema N.
A., 534 U.S. 506, 508 n. 1 (2002)), at the summary judgment stage, once the moving
party has proved the absence of a genuine issue of material fact, Celotex 477 U.S. at
323, the burden then shifts to the nonmoving party, who is required to “go beyond the
pleadings” to establish that there is a “genuine issue for trial,” id. at 324 (emphasis
added) (citation and internal quotation marks omitted). Because the plaintiffs have
failed to make the requisite showing of harm to competition, the defendants’ motion
for summary judgment is due to be granted.
Perhaps because the plaintiffs recognize that they cannot simply rely on their
pleadings at this stage, the plaintiffs contend also, albeit without providing any legal
authority for their position, that “[s]ummary judgment is improper before expert
Page 17 of 24

analysis, especially when obvious marketplace harms are associated with [the
d]efendants’ acts,” doc. 123 at 47, and that “expert opinion will provide additional
evidence on the issue,” id. Duly, after the expiration of the deadline for the plaintiffs
to file their response to the defendants’ motion for summary judgment, and without
moving for an extension of time or leave to file a surreply, the plaintiffs filed two
supplemental submissions in opposition to the motion for summary judgment. See
doc. 117 (briefing schedule establishing March 12, 2014 deadline for the plaintiffs
to respond); c.f. docs. 128-1 and 128-2 (plaintiffs’ supplemental submissions, filed
March 31, 2014). The court is somewhat at a loss to discern the plaintiffs’ intentions
regarding these additional submission, as the plaintiffs indicate that the submissions
“address issues unraised by [the d]efendants and unnecessary to [the d]efendants’
summary judgment motion.” Doc. 131 at 3. Moreover, the defendants seek to strike
the submissions as procedurally improper. Doc. 130. The court acknowledges the
defendants’ arguments, but, in the interest of thoroughness, has reviewed the
submissions for any evidence pertaining to the grounds on which the court is granting
the defendants’ motion for summary judgment on the antitrust claim, namely, that the
plaintiffs have failed to present any evidence that the defendants harmed competition
between pharmacies in Alabama. The court concludes that the submissions contain
no such evidence.

Page 18 of 24

The plaintiffs’ supplemental submissions are two expert reports, one prepared
by Christopher Mercer and Mercer Capital addressing the damages sustained by the
plaintiffs, doc. 128-1, and one prepared by John Simpson and the Brattle Group
addressing the elements and issues of the plaintiffs’ antitrust claims, doc. 128-2. As
the Mercer report addresses the damages sustained by the plaintiffs, as opposed to
Madison County or Alabama pharmacies generally, it is irrelevant to the issue of
whether the defendants harmed competition between pharmacies. The only
information in the Simpson report that can be construed as bearing on harm to
competition is the following10 :
MedImpact’s use of selective contracting reduced the compensation that
pharmacies obtain for filling prescriptions for PEEHIP members. As described
above, it is this compensation that provides the incentive for pharmacies to
compete on quality dimension such as the length of store hours, the provision
of home delivery, counseling and training, and the helpfulness of pharmacy
staff. Thus, in expectation, MedImpact’s lowering of compensation of
pharmacy would lead to reduced provision of these services.
Doc. 128 at 26. The Simpson report contains no citations indicating the basis of this
opinion. “While an expert may base an opinion on facts or data reasonably relied
upon by experts in the field, and this data need not be admissible in evidence,
‘[t]heoretical speculations, unsupported assumptions, and conclusory allegations
advanced by an expert . . . are [not] entitled to any weight when raised in opposition

10

Although the Simpson report contains an additional heading reading “MedImpact’s
Behavior Reduced Competition and Harmed Consumers,” doc. 128 at 20, the ensuing
information only discusses harm to consumers, id. at 20–25.
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to a motion for summary judgment.’” Browder v. Gen. Motors Corp., 5 F. Supp. 2d
1267, 1283 (M.D. Ala. 1998) (quoting E.T. Barwick Indus. v. Walter Heller & Co.,
692 F. Supp. 1331, 1347 (N.D. Ga.1987), aff'd, 891 F.2d 906 (11th Cir.1989)). It is
well established that “a party may not avoid summary judgment on the basis of an
expert’s opinion that fails to provide specific facts from the record to support its
conclusory allegations.” Evers v. Gen. Motors Corp., 770 F.2d 984, 985 (11th Cir.
1985). “Conclusory allegations without specific supporting facts have no probative
value.” Id. at 986; see also United States v. 0.161 Acres of Land, 837 F.2d 1036, 1040
(11th Cir.1988) (“[C]ertainly where an expert’s testimony amounts to no more than
a mere guess or speculation, a court should exclude his testimony.”). Because the
Simpson report fails to meet this circuit’s standards for expert testimony at the
summary judgment stage, the court will not consider it when determining whether the
motion for summary judgment on the antitrust claim is due to be granted. Therefore,
the defendants’ motion to strike the Mercer and Simpson reports, doc. 130, is moot.
In sum, the plaintiffs have failed to present any evidence indicating that the
defendants harmed competition among pharmacies within the state of Alabama.
Consequently, the defendants’ motion for summary judgment as to the plaintiffs’
antitrust claim is due to be granted.

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C. The plaintiffs’ unjust enrichment claim
Although their complaint states a claim of unjust enrichment in Count Three,
doc. 1-1 at 6–7, the plaintiffs failed to address the defendants’ arguments concerning
those claims in their response to the motion for summary judgment. Consequently,
the plaintiffs have abandoned their unjust enrichment claim and the defendants are
entitled to summary judgment on it. See e.g., Fischer v. Fed. Bureau of Prisons, 349
F. App’x 372, 375 n. 2 (11th Cir. 2009) (finding that the plaintiff waived claims he
did not address in his response to the defendant’s motion for summary judgment)
(citing Transamerica Leasing, Inc. v. Inst. of London Underwriters, 267 F.3d 1303,
1308 n. 1 (11th Cir. 2001)). Alternatively, summary judgment is also due because the
plaintiffs failed to present evidence that the defendants possess money that rightfully
belongs to the plaintiffs. See Hanock-Hazlett Gen. Constr. Co., Inc. v. Trane Co., 499
So. 2d 1385, 1387 (Ala. 1986) (rejecting the plaintiff’s unjust enrichment claim “as
a matter of law” because the defendant “does not have in its possession any money
belonging to [the plaintiff]”).
D. The plaintiffs’ remaining claims
“If at any time before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). This
matter was properly removed from state court based on this court’s jurisdiction over
the RICO claims pursuant to 28 U.S.C. 1331. Doc. 1 at 2. However, now that the
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court has granted the motion for summary judgment on that claim, the plaintiffs’
remaining claims—negligence, wantonness, and intentional interference with a
business relationship—solely raise questions of Alabama law. While the court may
have authority to exercise supplemental jurisdiction over these remaining state law
claims, it nevertheless may decline to exercise supplemental jurisdiction where, as
here, it “has dismissed all claims over which it has original jurisdiction.” 28 U.S.C.
§ 1367(c)(3). “[I]f the federal claims are dismissed before trial . . . the state claims
should be dismissed as well.” United Mine Workers of Am. v. Gibbs, 383 U.S. 715,
726 (1966); see also Arnold v. Tuskegee Univ., 212 F. App’x. 803, 811 (11th Cir.
2006) (“When the district court has dismissed all federal claims from a case, there is
a strong argument for declining to exercise supplemental jurisdiction over the
remaining state law claims.”); Raney v. Allstate Ins. Co., 370 F.3d 1086, 1089 (11th
Cir. 2004) (stating that the Eleventh Circuit “encourage[s] district courts to dismiss
any remaining state claims when, as here, the federal claims have been dismissed
prior to trial”). Considering that the plaintiffs’ remaining claims relate solely to issues
of Alabama statutory and common law and ultimately will require a resolution of
whether the claims are premised on contract law—as the plaintiffs contend—or on
the two statutes, neither of which provides a private cause of action, see doc. 12 at

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6–911 , comity points in favor of declining supplemental jurisdiction. Accordingly,
judicial economy, convenience, fairness, and certainly comity is best served by
remanding these claims back to the Circuit Court of Madison County, Alabama, see
Birster v. Am. Home Mortg. Servicing, Inc., 796 F. Supp. 2d 1376, 1380 (S.D. Fla.
2011) (rev’d on other grounds by 481 F. App’x 579 (11th Cir. 2012)) (remanding
state law claims to state court after granting defendant’s motion for summary
judgment on plaintiff’s sole federal claim), for the court to decide, among other
things, whether the plaintiffs’ common law claims are not dependent on a private
right of action conferred by Ala. Code §§ 27-45-3 and 34-23-115 and, if necessary,
the merits of the plaintiffs’ remaining state law claims.
IV. CONCLUSION
In sum, because the plaintiffs have failed to meet their evidentiary burden, the
defendants’ motion for summary judgment on the plaintiffs’ RICO, antitrust, and

11

The court’s decision to remand the plaintiffs’ remaining claims is also influenced by
the fact that the claims not only relate solely to state law, they also raise unanswered questions of
state law. See Arizonans for Official English v. Arizona, 520 U.S. 43, 79 (1997) (noting that a
“federal tribunal risks friction-generating error when it endeavors to construe a novel state Act
not yet reviewed by the State’s highest court”). Particularly, the resolution of the plaintiffs’
negligence and wantonness claims requires determinations regarding the meaning of and
interplay between Alabama’s Any Willing Provider statute, Ala. Code § 27-45-3, and its Usual
and Customary statute, Ala. Code § 34-23-115. Although the statutes have been in effect for
more than two decades, Alabama’s courts have afforded them little attention. Moreover, as
referenced above, while this court, when considering the defendants’ motion to dismiss pursuant
to Fed. R. Civ. P. 12(b)(6), found that the “[p]laintiffs have pled sufficient facts at this juncture
to establish that their common law claims are not dependent on a private right of action conferred
by” Ala. Code §§ 27-45-3 and 34-23-115, doc. 12 at 9 (emphasis added), principles of comity,
when viewed alongside the other factors advocating remand of this matter, counsel in favor of an
Alabama court determining whether that remains the case.
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unjust enrichment claims are due to be granted. The plaintiffs’ remaining negligence,
wantonness, and intentional interference with a business relationship claims are
remanded to the Circuit Court of Madison County, Alabama. The court will enter a
separate order consistent with this memorandum opinion.
DONE this 10th day of September, 2014.

________________________________
ABDUL K. KALLON
UNITED STATES DISTRICT JUDGE

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