Manes' Pharmacy, Inc. v. AmerisourceBergen Drug Corporation

Filing 92

MEMORANDUM OPINION AND ORDER granting 61 Defendant's Motion for Summary Judgment and denying 65 Plaintiff's Motion for Partial Summary Judgment. Judgment will be entered contemporaneously with this Order. Signed by Honorable Timothy L. Brooks on March 7, 2025. (tmc)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
MANES’ PHARMACY, INC.
V.

PLAINTIFF
CASE NO. 2:22-CV-2186

AMERISOURCEBERGEN DRUG CORPORATION

DEFENDANT

MEMORANDUM OPINION AND ORDER
Before the Court are the parties’ cross-Motions for Summary Judgment (Docs. 61
and 65), and their briefs, responses, replies, and statements of facts in support of or
opposition to those motions (Docs. 62–63, 66, 78–80, 82, 87). For the reasons given
below, Plaintiff Manes’ Pharmacy, Inc’s (“Manes”) Motion for Summary Judgment (Doc.
65) is DENIED, and Defendant AmerisourceBergen Drug Corporation’s (“ABDC”) Motion
for Summary Judgment (Doc. 61) is GRANTED.
I. BACKGROUND
As the Court recounted in previous orders:
This dispute arises between a pharmacy and the pharmacy’s wholesale
distributor of, among other products, controlled substances. Manes is a
pharmacy that has served the local Van Buren, Arkansas community for
nearly 40 years. [ABDC] is a wholesale distributor of pharmaceutical
products, including controlled substances. Manes alleges that it has
purchased pharmaceuticals from [ABDC] for over 15 years. Manes
purchases many different medications from [ABDC]’s facility in Tulsa,
Oklahoma. According to [ABDC], the wholesaler sells Manes both
controlled and non-controlled substances.
. . . [T]his dispute . . . arise[s] from [ABDC]’s decision to restrict its sale of
controlled substances and listed chemicals to Manes. 1 In a November 2,
2022 letter memorializing that decision, [ABDC] explained that members of
1 For convenience, controlled substances and listed chemicals will collectively be referred

to as “controlled substances” throughout this Opinion and Order.
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its Controlled Substance Monitoring Program reviewed Manes’ dispensing
practices and identified several “red flags.” Specifically, [ABDC] was
concerned that Manes: (1) dispensed controlled substances for
prescriptions from family/general practitioners; (2) dispensed combinations
of opioids and benzodiazepines; (3) dispensed multiple controlled
substances in the same therapeutic class concurrently; and (4) dispensed
controlled substances [prescribed by] a dentist in large quantities. Manes
was given the opportunity to dispute or respond to these allegations in
writing.
Manes responded to the letter and indicated that it would change its
dispensing practices to comply with [ABDC]’s letter. Manes’ owner also
requested reconsideration of [ABDC]’s decision to cease sales, stating “I
am willing to do what ever I have to do to avoid suspension of sales of
controlled substances.”
[ABDC] acknowledged receipt of the
reconsideration request the same day. Six days later, [ABDC] sent a second
letter stating that Manes’ letter did not adequately address its concerns.
[ABDC] indicated that its restriction of controlled substances sales to Manes
would go into effect on November 30, 2022.
(Doc. 38, pp. 1–2) (internal citations and quotation marks omitted).
Manes sued ABDC in Arkansas state court on December 2, 2022 (Doc. 4), and
contemporaneously filed a motion for a temporary restraining order and preliminary
injunction (Doc. 5), seeking an order requiring ABDC to continue its sale of controlled
substances to Manes. ABDC removed the case to this Court on December 6, 2022. See
Doc. 2. After a multi-day evidentiary hearing, this Court entered an Order (Doc. 38)
denying Manes’ motion for injunctive relief. Discovery then proceeded without incident
and has now concluded.
Manes’ operative complaint brings claims against ABDC for breach of contract,
tortious interference with business expectancies, defamation, and compelled selfdefamation, and seeks both compensatory and punitive damages. See Doc. 53, ¶¶ 86–
180. ABDC has filed a motion for summary judgment, seeking dismissal of all these
claims. Manes has also filed a motion for partial summary judgment, asking this Court to

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find ABDC liable to Manes as a matter of law on all of its claims except for self-defamation.
Both motions have been fully briefed and are now ripe for decision.
II. LEGAL STANDARD
A party moving for summary judgment must establish both the absence of a
genuine dispute of material fact and its entitlement to judgment as a matter of law. See
Fed. R. Civ. P. 56; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–
87 (1986); Nat’l Bank of Commerce of El Dorado v. Dow Chem. Co., 165 F.3d 602, 607
(8th Cir. 1999). The same standard applies where, as here, the parties have filed crossmotions for summary judgment.

When no material facts are in dispute, “summary

judgment is a useful tool whereby needless trials may be avoided, and it should not be
withheld in an appropriate case.” United States v. Porter, 581 F.2d 698, 703 (8th Cir.
1978). Each motion should be reviewed in its own right, however, with each side “entitled
to the benefit of all inferences favorable to them which might reasonably be drawn from
the record.” Wermager v. Cormorant Twp. Bd., 716 F.2d 1211, 1214 (8th Cir. 1983); see
Canada v. Union Elec. Co., 135 F.3d 1211, 1212–13 (8th Cir. 1998). In order for there to
be a genuine issue of material fact, the non-moving party must produce evidence “such
that a reasonable jury could return a verdict for the nonmoving party.” Allison v. Flexway
Trucking, Inc., 28 F.3d 64, 66 (8th Cir. 1994) (quoting Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 248 (1986)).
III. DISCUSSION
As noted above, Manes’ operative complaint brings claims against ABDC for
breach of contract, tortious interference with business expectancies, defamation, and

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compelled self-defamation, and seeks both compensatory and punitive damages. See
Doc. 53, ¶¶ 86–180. The Court will discuss these claims in that same sequence below.
A. Breach of Contract
First, ABDC is entitled to summary judgment on Manes’ claim for breach of
contract, because the contract here provides ABDC with complete discretion on whether
to sell controlled substances to Manes. Specifically, the relevant clause states:
Notwithstanding any purchase commitments in this Agreement or the
Member Agreements, ABDC has no obligation to sell controlled substances
or listed chemicals to Customers or Members and, in addition, ABDC may
restrict, prevent, and/or reject orders from Customers or Members of
controlled substances or listed chemicals as a result of any findings of the
controlled substances monitoring program.
(Doc. 61-26, p. 15, § 7(A)). In other words, and simply put, the contract imposes no duty
on ABDC to sell controlled substances to Manes if it does not wish to do so. Obviously,
a party to a contract cannot breach a duty which does not exist. Cf. Larry Hobbs Farm
Equipment, Inc. v. CNH Am., LLC, 2008 WL 3931323, at *3 (E.D. Ark. Aug. 22, 2008)
(“[T]ermination without good cause is not a breach of the contract because the . . .
Agreement allowed for termination without good cause.”).
Perhaps in anticipation of this fundamental problem, Manes’ operative complaint
alleges three additional ways in which ABDC breached their contract:
a. Failing to communicate updates in its policies and procedure[s] to Plaintiff;
b. Failing to communicate its concerns in a manner that would allow Plaintiff to
cure any potential defects in Plaintiff’s business; [and]
c. Failing to use [Personal Health Information] to allow Plaintiff to cure
Defendant’s concerns[.]
(Doc. 53, ¶ 103). But Manes’ contract claim does not fare any better under any of these
theories.

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First, with respect to communicating updates in ABDC’s policies and procedures,
the governing clause provides that:
ABDC may, from time to time, develop policies and procedures relative to
new or existing services offered to customers, on an interim or as-needed
basis. If ABDC develops such policies or procedures or changes current
ones, ABDC will provide Member with written notice at least thirty (30) days
before such changes are effective.
(Doc. 61-26, p. 34, § 5). The updated procedure which Manes alleges was not timely
communicated to it is found within ABDC’s Diversion Control Program Policies and
Procedures at DCP SOP-12.3.10, entitled “Ongoing Monitoring Activities.” See Doc. 6123. This procedure’s self-described purpose is “[t]o establish the process to continually
monitor customer trends and ordering patterns of controlled substances and listed
chemicals . . . by [ABDC] customers to further detect and prevent diversion into other than
legitimate medical, scientific, and industrial channels.” Id. at 1, § 1. To that end, the
updated policy is for ABDC’s Controlled Substance Monitoring Program team to “carry
out activities that are designed to supplement its Order Monitoring Program . . ., which is
the system it has created for identifying and investigating Orders of Interest and for
reporting Suspicious Orders to the DEA, as a means of further reducing the risk of
diversion.” See id., § 2.1 (emphasis in original). The policy goes on to specify the various
methods and processes by which this monitoring program will be conducted.

See

generally id. But by the contract’s own language, ABDC had no duty to provide Manes
with notice of this policy update, because the update in question was not to procedures
for providing “new or existing services . . . to customers”; rather, it was to procedures for
monitoring customers’ purchasing activities.

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Second, with respect to whether ABDC communicated its concerns in a manner
that would allow Manes to cure any potential defects in Manes’ business—Manes has not
identified any contractual provision that imposes any such duty on ABDC. In fact, as
already described above, the contract gives ABDC essentially unfettered discretion on
whether to sell controlled substances to Manes at all.
And third, with respect to whether ABDC failed to use Personal Health Information
(“PHI”) to allow Manes to cure ABDC’s concerns—here too, ABDC had no such
contractual duty. The clause relied upon by Manes for this claim states:
Each Customer represents to ABDC that it is a HIPAA “business
associate” of Member and Customer and Member have entered into a valid
business associate agreement that is currently in effect. Members must
authorize and direct ABDC, in ABDC’s capacity as a business associate, to
have Customers share Dispensing Data and personal health information
(“PHI”) with ABDC, to the extent such PHI disclosures would be permissible
and for purposes of such Member’s “payment” or “health care operations.”
Members will notify ABDC if they terminate a business associate agreement
with Customers during the Term and Customers will promptly discontinue
disclosure of Dispensing Data and PHI.
(Doc. 61-26, p. 8, § 4.C.2) (emphasis in original). As can be seen, this clause imposes a
duty on Manes to “authorize and direct ABDC . . . to have Customers share Dispensing
Data and personal health information . . . with ABDC . . . for purposes of [Manes]’
‘payment’ or ‘health care operations.’” Id. It does not impose any duty on ABDC to use
customers’ PHI for other purposes such as performing investigations under its Controlled
Substance Monitoring Program.
Finally, Manes also argues that ABDC breached the implied duty of good faith and
fair dealing which accompanies contracts under Arkansas law. As the Court previously
noted in its Order denying Manes’ request for preliminary injunctive relief, Arkansas “does
not recognize a separate tort cause of action for breach of [the] implied covenants” of
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good faith and fair dealing, see West Memphis Adolescent Residential, LLC v. Compton,
2010 Ark. App. 450, at *9, 374 S.W.3d 922, 927, but these duties can implicate claims for
breach of contract, see id. at *5–*7, 374 S.W.3d at 925–26. On this point, the Arkansas
Supreme Court has explained that there also is no “separate contract claim for breach of
the duty of good faith and fair dealing,” but that rather a breach of this duty “remains
nothing more than evidence of a possible breach of a contract between parties.” See Ark.
Rsch. Med. Testing, LLC v. Osborne, 2011 Ark. 158, at *6, 2011 WL 1423993, at **3. But
here, as discussed above, ABDC had no underlying contractual duty to continue selling
controlled substances to Manes, to inform Manes of changes to its Order Monitoring
Program, to give Manes the opportunity to change its prescription-filling practices, or to
use Manes’ customers’ PHI to cure ABDC’s concerns. Thus, even if ABDC did breach its
duty of good faith and fair dealing, that would make no difference here because there
simply is no underlying contractual duty for which this could be evidence of having been
breached. Accordingly, ABDC is entitled to summary judgment on Manes’ claim for
breach of contract, which will be dismissed with prejudice.
B. Tortious Interference with Business Expectancies
Manes has also brought a claim against ABDC for tortious interference with Manes’
business expectancies. The allegation here is that ABDC knew Manes had legitimate
business expectancies with customers to whom Manes sells controlled substances, and
with other wholesale distributors from whom Manes purchases controlled substances;
and that ABDC’s decision to terminate sales of controlled substances to Manes, and its
conduct surrounding that decision, caused Manes to lose business from many of those
customers and distributors. To prevail on this claim, Manes must prove: (1) the existence

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of a valid business expectancy; (2) knowledge by ABDC of this business expectancy; (3)
intentional interference by ABDC inducing or causing a termination of the relationship or
expectancy; and (4) resultant damage to Manes. See Dodson v. Allstate Ins. Co., 345
Ark. 430, 444, 47 S.W.3d 866, 875 (2001). Additionally, Manes must prove that ABDC’s
conduct in this regard was “improper.” Id. at 444–45, 47 S.W.3d at 875.
Here, there is no material factual dispute as to whether ABDC’s conduct was
improper. Manes argues that ABDC’s actions were improper because it “published false
statements as to the reasoning behind [Manes]’ restriction,” and that ABDC’s “true interest
in restricting the sale of controlled substances to [Manes] was because [Manes] was too
large of a regulatory risk for [ABDC].” See Doc. 66, pp. 15–16. But the undisputed
evidence shows that in fact ABDC explicitly informed Manes of this very interest in its
November 2, 2022 letter informing Manes of its decision to restrict sales of controlled
substances. That letter stated ABDC had “concerns regarding the controlled substance
sales which may place both [ABDC] and [Manes] at risk for regulatory action by state
and/or federal agencies.” See Doc. 61-18, p. 2. It then went on to specifically list four
“red flags” in Manes’ dispensing practices that ABDC’s Controlled Substances Monitoring
Program had identified, and explained to Manes the process by which it could request
that ABDC reconsider this decision. See id. There simply is no evidence in the record
that ABDC concealed its interest in mitigating regulatory risk from Manes. And Arkansas
caselaw is clear that “[s]o long as a defendant does not employ improper means, a
defendant’s own economic interest provides sufficient justification for an alleged tortious
interference.” Farm Credit Midsouth, PCA v. Bollinger, 2018 Ark. App. 224, at *11, 548

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S.W.3d 164, 173. Therefore, ABDC is entitled to summary judgment on Manes’ claim for
tortious business interference, which will be dismissed with prejudice. 2
C. Defamation and Compelled Self-Defamation
Turning now to Manes’ claim for defamation: Manes alleges that ABDC defamed it
by publishing the November 2, 2022 letter that informed Manes of ABDC’s decision to
stop selling it controlled substances. Specifically, there are two publications at issue here:
(1) a November 30, 2022 email that ABDC sent to the Arkansas Attorney General (“AG”)
and the federal Drug Enforcement Agency (“DEA”), which contained an excerpt from the
November 2 letter listing the four “red flags” it identified in Manes’ dispensing practices;
and (2) ABDC’s provision on November 22, 2022 of a copy of the November 2 letter to
the Arkansas Board of Pharmacy (“BOP”). The problem here for Manes’ claim is that the
undisputed evidence shows that ABDC was legally obligated to make these disclosures.
ABDC was required by a court-ordered injunction to inform the state of Arkansas, “in a
uniform format,” within five days whenever it terminates a customer’s eligibility to receive
controlled substances from it. See Doc. 61-15, p. 11, § XIV.B. The November 30 email
to the AG and the DEA expressly states that it was being sent “[i]n accordance with the
requirements outlined in” that injunction, and notes that Manes’ “termination went into
effect on November 30, 2022,” the same day the email was sent. See Doc. 61-8. And

2 The only “false” statement that Manes has identified in the November 2 letter is a

statement that one of the “red flags” was that Manes had dispensed “controlled
substances to a dentist in large quantities,” see 61-18, p. 2 (emphasis added), when in
fact it should have stated that Manes dispensed controlled substances prescribed by a
dentist in large quantities. The author of the letter testified that this was a typographical
error, see Doc. 61-29, pp. 45–46 (internally numbered 173:20–174:12), and Manes has
not provided any evidence rebutting or undermining that proposition or otherwise creating
any material dispute of fact as to whether this constituted improper conduct on the part of
ABDC.
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the November 22 provision of the November 2 letter to the BOP was made in response
to a subpoena that the BOP issued to ABDC. See Doc. 61-6. Arkansas law provides a
“qualified privilege” to protect statements that are “made in good faith upon any subjectmatter in which the person making the communication has an interest or in reference to
which he has a duty, and to a person having a corresponding interest or duty, although it
contains matters which, without such privilege, would be actionable.” Singer v. Harris,
2016 WL 10489850, at *6 (E.D. Ark. July 13, 2016) (quoting Navorro-Monzo v. Hughes,
763 S.W.2d 635, 638 (Ark. 1989)) (emphasis added).
Importantly, the initial determination of whether the privilege exists is a matter of
law. See Minor v. Failla, 329 Ark. 274, 282, 946 S.W.2d 954, 958 (1997), overruled on
other grounds by United Ins. Co. of Am. v. Murphy, 331 Ark. 364, 961 S.W.2d 752 (1998).
Then, once the privilege is established, “the burden shifts to the plaintiff to prove the
privilege has been abused by excessive publication, by use of the occasion for an
improper purpose, or by lack of belief or grounds for belief in the truth of what is said.”
Ikani v. Bennett, 284 Ark. 409, 413, 682 S.W.2d 747, 749 (1985). Here, the Court finds
that ABDC’s publications of its November 2 letter to Manes were privileged because,
again, the undisputed evidence shows they were made in good faith pursuant to a legal
duty. And because Manes has not produced any evidence that these publications were
excessive, for an improper purpose, or with any lack of belief or grounds for their contents,
ABDC is entitled to summary judgment on Manes’ claim for defamation, which will be
dismissed with prejudice.
As for Manes’ claim for compelled self-defamation: there is no such cause of action
in Arkansas. See O’Connor v. Clorox Co., 14 Fed. Appx. 745, 746 (8th Cir. 2001). Manes

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asks this Court to find that the Arkansas Supreme Court would recognize such a claim if
asked, but Manes has not provided this Court with any case in which the Arkansas
Supreme Court has implied or hinted that it would do so. Absent any such authority, this
Court has no basis for finding the Arkansas Supreme Court would recognize this cause
of action. See Blankenship v. USA Truck, Inc., 601 F.3d 852, 856 (2010). And without
such a finding, Manes cannot proceed on that claim, which, accordingly, will be dismissed.
IV. CONCLUSION
Finally, since all of Manes’ claims are being dismissed, it obviously is not entitled
to recover the compensatory and punitive damages requested in its complaint. And since
ABDC is entitled to summary judgment on all claims when the record is viewed in the light
most favorable to Manes, it logically follows that Manes cannot prevail on its own motion
when the record is viewed in the light most favorable to ABDC.
IT IS THEREFORE ORDERED that Plaintiff Manes’ Pharmacy, Inc’s Motion for
Summary Judgment (Doc. 65) is DENIED, and Defendant AmerisourceBergen Drug
Corporation’s Motion for Summary Judgment (Doc. 61) is GRANTED. Plaintiff’s claims
are DISMISSED WITH PREJUDICE. Judgment will be entered contemporaneously with
this Order.
IT IS SO ORDERED on this 7th day of March, 2025.

________________________________
TIMOTHY L. BROOKS
UNITED STATES DISTRICT JUDGE

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