Stafford v. Rite Aid Corporation

Filing 239

ORDER (1) Vacating Hearing, and (2) Denying Defendants' Motion to Stay (ECF No. 230 ). The Parties SHALL CONTACT Magistrate Judge Goddard's chambers within three (3) court days of the electronic docketing of this Order to obtain an updated Scheduling Order. Signed by Judge Todd W. Robinson on 11/3/2022. (fth)

Case 3:17-cv-01340-TWR-AHG Document 239 Filed 11/03/22 PageID.13266 Page 1 of 7

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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BRYON STAFFORD, individually and on
behalf of all others similarly situated,
Plaintiff,
v.
RITE AID CORPORATION,
Defendant.

Lead Case No.: 17-CV-1340 TWR (JLB)
(consolidated with No. 18-CV-152 TWR
(JLB))
ORDER (1) VACATING HEARING,
AND (2) DENYING DEFENDANTS’
MOTION TO STAY
(ECF No. 230)

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Presently before the Court is the Motion to Stay Pending Resolution of Ninth Circuit

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Appeal in Washington v. CVS Pharmacy, Inc., No. 21-16162 (9th Cir. filed July 12, 2021)

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(the “Washington appeal”) (“Mot.,” ECF No. 230), filed by Defendants Rite Aid

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Corporation and Rite Aid Hdqtrs. Corp., as well as Plaintiffs Bryon Stafford and Robert

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Josten’s Response in Opposition to the Motion (“Opp’n,” ECF No. 233), Defendants’

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Reply in Support of the Motion (“Reply,” ECF No. 238), and Plaintiffs’ Notice of

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Supplemental Authority. (See ECF No. 237-1 (Order, County of Monmouth v. Rite Aid

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Corp., No. 20-cv-2024 (E.D. Pa. filed Oct. 19, 2022)) (the “Monmouth Order”.) The Court

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VACATES the hearing scheduled for November 10, 2022, and takes the Motion under

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submission on the papers and without oral argument pursuant to Civil Local Rule 7.1(d)(1).
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Having carefully considered Defendant’s Motion, the Washington appeal, the Parties’

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arguments, and the relevant law, the Court DENIES Defendant’s Motion.

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BACKGROUND

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Plaintiff Bryon Stafford initiated this putative class action on June 30, 2017, alleging

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causes of action against Rite Aid Corporation for violations of the California Unfair

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Competition Law (“UCL”), violations of the California Consumer Legal Remedies Act

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(“CLRA”), unjust enrichment, and negligent misrepresentation. (See generally ECF No.

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1.) Specifically, Plaintiff alleged that, “[a]t bottom, this action concerns Rite Aid’s illegal

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practice of overcharging customers enrolled in public or private health care plans for

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generic prescription drugs by submitting to third-party payors claims for payment at prices

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that Rite Aid has knowingly and intentionally inflated about its ‘usual and customary’

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prices.” (See id. ¶ 8.)

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Plaintiff Stafford amended his Complaint on July 28, 2017, (see generally ECF No.

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18), and Rite Aid Corporation moved to dismiss. (See generally ECF No. 19.) On

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December 19, 2017, the Honorable Anthony J. Battaglia granted Rite Aid Corporation’s

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motion to dismiss, dismissing without prejudice Plaintiff Stafford’s claims as time-barred.

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(See generally ECF No. 29.) Plaintiff Stafford filed a further amended complaint on

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January 9, 2018, adding allegations to support equitable tolling on the statute of limitations.

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(See generally ECF No. 30.) Defendant Rite Aid Corporation against moved to dismiss on

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January 23, 2018. (See ECF No. 32.)

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Plaintiff Robert Josten also filed his own putative class action on January 23, 2018,

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alleging similar causes of action for negligent misrepresentation, unjust enrichment,

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violation of the unfair and unlawful prongs of the UCL, violation of the CLRA, and

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declaratory and injunctive relief. (See generally No. 18-CV-152, ECF No. 1.) Rite Aid

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Corporation moved to dismiss the Josten action on March 16, 2018. (See generally No.

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18-CV-152, ECF No. 15.)

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On September 28, 2018, Judge Battaglia denied Rite Aid Corporation’s motion to

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dismiss the Stafford action, concluding that Plaintiff Stafford had adequately alleged his
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causes of action. (See generally ECF No. 41.) Rite Aid Corporation subsequently

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answered Stafford’s Second Amended Complaint, (see generally ECF No. 42), and the

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case proceeded to discovery. (See generally Docket.) Rite Aid Corporation moved to

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compel arbitration as to Plaintiff Stafford on June 17, 2019. (See generally ECF No. 78.)

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Meanwhile, Judge Battaglia granted Rite Aid Corporation’s motion to dismiss the

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Josten action for failure adequately to plead tolling of the statute of limitations on

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November 20, 2018. (See generally No. 18-CV-152, ECF No. 25.) Plaintiff Josten filed

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an amended complaint on December 11, 2018, (see generally No. 18-CV-152, ECF No.

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27), which Rite Aid Corporation moved to dismiss on December 21, 2018. (See generally

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No. 18-CV-152, ECF No. 28.) Judge Battaglia denied the motion on August 7, 2019,

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concluding that Plaintiff Josten had “appropriately allege[d] tolling” and that “Josten’s

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claims do not arise under The Medicare Act and are thus not subject to its exhaustion

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requirements.” (See generally No. 18-CV-152, ECF No. 38.)

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At the Parties’ request, (see ECF No. 100; No. 18-CV-152, ECF No. 57), the Stafford

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and Josten actions were consolidated on October 24, 2019. (See ECF No. 101; No. 18-

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CV-152, ECF No. 58.) Rite Aid filed a motion to compel arbitration as to Plaintiff Josten

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on December 30, 2019. (See generally ECF No. 114.) Judge Battaglia denied the motion

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to compel arbitration as to Plaintiff Stafford on February 25, 2020, (see ECF No. 134), and

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granted the Parties’ joint motion to add Rite Aid Hdqtrs. Corp. as a Defendant on March 4,

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2020. (See ECF No. 138.) Plaintiffs filed their respective operative complaints on

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March 6, 2020. (See ECF Nos. 145 (“Stafford TAC”), 146 (“Josten SAC”).)

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On March 24, 2020, Defendant Rite Aid Corporation appealed Judge Battaglia’s

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denial of its motion to compel arbitration as to Plaintiff Stafford. (See ECF No. 148.) The

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Parties then proceeded to discovery, (see, e.g., ECF No. 152), and Defendant Rite Aid

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Hdqtrs. Corp. moved to compel arbitration as to Plaintiff Stafford, (see ECF No. 163), and

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Plaintiff Josten. (See ECF No. 166.) On June 10, 2020, Defendants moved ex parte to stay

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the consolidated actions in light of their then-pending appeal of the arbitration issue, (see

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ECF No. 183), which request Judge Battaglia granted on July 30, 2020. (See ECF No.

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196.)

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These consolidated actions were then transferred to the undersigned on October 6,

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2020, (see ECF No. 201), at which time the Court denied without prejudice the pending

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motion to compel arbitration as to Plaintiff Josten. (See ECF No. 202.) On May 21, 2021,

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the Ninth Circuit affirmed Judge Battaglia’s denial of Defendant Rite Aid Corporation’s

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motion to compel arbitration as to Plaintiff Stafford. See Stafford v. Rite Aid Corp., 998

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F.3d 862 (9th Cir. 2021). The Court therefore lifted the stay on July 20, 2021. (See ECF

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No. 209).

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On August 3, 2021, however, the Parties jointly moved to stay these proceedings

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pending mediation. (See ECF No. 211.) These consolidated actions remained stayed

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pending mediation for over a year until the Court lifted the stay on September 1, 2022, (see

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ECF No. 227), following an “impasse” in the Parties’ settlement negotiations. (See ECF

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No. 226.) As intimated in the Parties’ August 31, 2022 Joint Status Report, the instant

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Motion followed on September 15, 2022. (See generally ECF No. 230.)

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LEGAL STANDARD

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The court’s power to stay proceedings is “incidental to the power inherent in every

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court to control the disposition of the cases on its docket with economy of time and effort

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for itself, for counsel, and for litigants.” See Landis v. N. Am. Co., 299 U.S. 248, 254

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(1936). The court must consider three factors in determining whether to issue a stay: (1) the

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possible damage which may result from granting a stay; (2) the hardship or inequity which

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a party may suffer in being required to go forward; and (3) the orderly course of justice

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measured in terms of the simplifying or complicating of issues, proof, and questions of law

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which could be expected to result from a stay. See CMAX, Inc. v. Hall, 300 F.2d 265, 268

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(9th Cir. 1962) (citing Landis, 299 U.S. at 254–55). “The proponent of a stay bears the

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burden of establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997) (citation

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omitted). If the opposing party can show “even a fair possibility” of harm due to the stay,

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the party requesting the stay “must make out a clear case of hardship or inequity.” See
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Lockyer v. Mirant Corp., 398 F.3d 1098, 1112 (9th Cir. 2005) (quoting Landis, 299 U.S.

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at 255).

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ANALYSIS

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Rite Aid requests that the Court stay this action “until the resolution of the appeal in

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Washington v. CVS Pharmacy, Inc., No. 21-16162 (9th Cir., filed July 9, 2021).” (See Mot.

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at 2.) According to Rite Aid, “[t]he Washington appeal is poised to resolve several

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questions that are critical for efficient discovery and resolution of discovery disputes, class

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certification, summary judgment and, if necessary, trial of this action” because, “[a]s in

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this case, Washington involves consumers asserting that the pharmacy violated a duty to

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not collect a copayment from them that exceeded its ‘usual and customary’ (“U&C”) price,

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which the consumers allege was the special discounted price offered to members of the

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pharmacy’s membership discount program.” (See id.) Plaintiffs respond that “[n]either

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the substance nor pendency of Washington impact proceedings in this action” because

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“Plaintiffs here are not proceeding on the same contract-based theories of liability as in

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Washington.” (See Opp’n at 1.)

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The Court agrees with Plaintiffs. In Washington, the plaintiffs-appellants argue that

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the district court erred when it instructed the jury “as to third-party beneficiary status under

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the contracts between CVS and the pharmacy benefit managers” because the plaintiffs did

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not advance a breach-of-contract claim at trial. (See ECF No. 230-2 (“Ex. A”) at 24.) Here,

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by contrast, Judge Battaglia has determined, (see ECF No. 41 at 14 n.1), and reaffirmed,

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(see ECF No. 134 at 6)—and the Ninth Circuit has affirmed, see Stafford, 998 F.3d at 867–

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68)—that Plaintiffs’ claims do not depend on the contracts between Defendants and their

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pharmacy benefit managers. Further, as the Honorable Mitchell S. Goldberg recently

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determined in County of Monmouth v. Rite Aid Corporation, “the issues on appeal [in

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Washington] are mostly evidentiary, and there is therefore no reason to stay discovery

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while the appeal proceeds.” (See Monmouth Order at 2.) Defendants have therefore failed

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to demonstrate that awaiting a decision from the Ninth Circuit in Washington will further

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the “orderly course of justice” by simplifying issues in these consolidated proceedings.
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Indeed, Stafford—which was filed over five years ago, (see generally ECF No. 1)—

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is the second oldest case on the Court’s docket (Josten is the third). These consolidated

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actions have essentially been stayed since July 30, 2020, pending appeal and then

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mediation. (See ECF Nos. 196, 212.) As early as August 3, 2021, the Parties represented

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to the Court that “[t]he stay requested should not materially delay trial.” (See, e.g., ECF

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No. 211 at 2.) The Court extended the stay pending mediation several times based on its

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understanding that the Parties were working diligently and in good faith toward settlement.

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(See ECF Nos. 219, 221, 223, 225; see also, e.g., ECF No. 224 ¶ 4 (“Since the last joint

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status report was filed, the parties have made progress towards a potential resolution, and

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have agreed to continue discussions in the coming weeks.”).) The Court was therefore

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surprised when the Parties reported on August 31, 2022, that their settlement negotiations

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had failed, (see ECF No. 226), leaving these relatively ancient consolidated proceedings in

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their nascency and in the midst of discovery. Given these circumstances, all of the Landis

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factors—the possible damage from granting a stay, the hardship in requiring Defendants to

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go forward, and the orderly course of justice—weigh against the granting of a further stay

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in this action. See, e.g., Reyes v. Educ. Credit Mgmt. Corp., No. 15-CV-00628-BAS-AGS,

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2017 WL 4640418, at *5 (S.D. Cal. Oct. 17, 2017) (concluding that “the public interest

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does not warrant a stay of all proceedings given the length of time this case has been

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pending and the underlying allegations” where “[t]his case is over two and a half years

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old”). The Court therefore DENIES Defendants’ Motion.

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CONCLUSION

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In light of the foregoing, the Court DENIES Defendant’s Motion to Stay (ECF No.

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230).

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Accordingly, the Parties SHALL CONTACT Magistrate Judge Goddard’s

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chambers within three (3) court days of the electronic docketing of this Order to obtain an

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updated Scheduling Order.

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IT IS SO ORDERED.
Dated: November 3, 2022
_____________________________
Honorable Todd W. Robinson
United States District Judge

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