Physician Specialty Pharmacy, LLC v. Prime Therapeutics, LLC

Filing 81

ORDER granting 68 Plaintiff's Motion for Leave to File Second Amended Complaint. (Written Opinion) Signed by Magistrate Judge Tony N. Leung on 4/19/2019. (JRE)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Physician Specialty Pharmacy, LLC,

No. 18-cv-1044 (MJD/TNL)

Plaintiff,
v.

ORDER

Prime Therapeutics, LLC,
Defendant.

Adrienne Dresevic and Robert J. Dindoffer, The Health Law Partners, P.C., 32000
Northwestern Highway Suite 240, Farmington Hills, MI 48334 and Elizabeth R. Odette
and Kristen G. Marttila, Lockridge Grindal Nauen P.L.L.P., 100 Washington Avenue
South, Suite 2200, Minneapolis, MNN 55401 (for Plaintiff); and
Christine Lindblad, Meghan M.A. Hansen, Ellie J. Barragry, and Alex L. Rubenstein, Fox
Rothschild LLP, 222 South Ninth Street, Minneapolis, MN 5540 (for Defendant).
This matter is before the Court on Plaintiff’s Motion for Leave to File Second
Amended Complaint. (ECF No. 68). Based on all the files, records, and proceedings herein,
and for the reasons set forth below, this Court will grant Plaintiff’s motion.
I.

BACKGROUND
On April 18, 2018, Physician Specialty Pharmacy, LLC (“PSP”) filed suit against

Prime Therapeutics, LLC (“Prime”), alleging a variety of federal and state law claims.
(ECF No. 1). PSP filed an amended complaint two days later. (ECF No. 6). The complaint
centered on allegations that Prime unlawfully withheld payments from PSP and that Prime
terminated PSP from its pharmacy network in order to benefit a partnership between Prime
and Walgreens.

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Prime moved to dismiss. (ECF No. 18). The motion was referred to this Court for a
Report and Recommendation. (ECF No. 25). Following argument in the matter, this Court
recommended that the federal claims be dismissed for failure to state a claim and that the
state law claims be dismissed for lack of jurisdiction. (ECF No. 62). This Court also
recommended that PSP be allowed to file an amended complaint. Both parties objected to
the Report and Recommendation. (ECF Nos. 64 and 65).
Before the District Judge could rule on the Report and Recommendation, PSP filed
a motion for leave to file a second amended complaint. (ECF No. 68). In response, Prime
sought an urgent telephonic hearing, asking that the Court not consider the motion because
objections to the Report and Recommendation were pending and because PSP did not
meet-and-confer with Prime before filing the motion. (ECF No. 73). Alternatively, Prime
sought an additional 30 days to respond to the motion. (ECF No. 73). The Court denied the
request for a telephonic conference, but extended the deadline for Prime to respond to
PSP’s motion until April 17, 2019. (ECF No. 74). The Court rescheduled the motion
hearing for April 24, 2019.
Shortly thereafter, the District Judge adopted the Report and Recommendation,
concluding “that PSP has failed to plausibly plead antitrust claims under federal law and
that PSP should be allowed the opportunity to file an amended complaint.” (ECF No. 75).
The District Judge declined to address whether it was appropriate to exercise supplemental
jurisdiction over the state law claims. (ECF No. 75).
Prime then filed its memorandum in opposition to PSP’s motion for leave to file a
second amended complaint. (ECF No. 77). Prime’s memorandum was 54 pages long and
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11,997 words, just three words short of the word limit provided for by the Court’s local
rules. LR 7.1(f). With the exception of one page in its memorandum, Prime argued that the
Court should deny PSP’s motion because the proposed amendments would be futile. Prime
also filed a declaration containing approximately 130 pages of exhibits. (ECF No. 78).
This time it was PSP’s turn to file a letter seeking an urgent telephonic hearing.
(ECF No. 79). PSP argued that Prime’s memorandum constituted an “an improperly-filed
motion to dismiss.” (ECF No. 79). PSP asked that the Court strike Prime’s memorandum
or provide it “equal and adequate time to reply.” (ECF No. 79). PSP requested an additional
30 days to draft such a memorandum. (ECF No. 79). Prime file a letter opposing PSP’s
requests. (ECF No. 80).
II.

MOTION TO AMEND
Once 21 days have passed after service of a responsive pleading, a party “may

amend its pleading only with the opposing party’s written consent or the court’s leave.”
Fed. R. Civ. P. 15(a)(2). “Although leave to amend ‘shall be freely given when justice so
requires,’ see Fed. R. Civ. P. 15(a), plaintiffs do not have an absolute or automatic right to
amend.” United States ex rel. Lee v. Fairview Health Sys., 413 F.3d 748, 749 (8th Cir.
2005) (citing Meehan v. United Consumers Club Franchising Corp., 312 F.3d 909, 913
(8th Cir. 2002)). The Court may deny a party’s request for leave to amend only “if there
are compelling reasons such as undue delay, bad faith, or dilatory motive, repeated failure
to cure deficiencies by amendments previously allowed, undue prejudice to the nonmoving party, or futility of the amendment.” Reuter v. Jax Ltd., Inc., 711 F.3d 918, 922
(8th Cir. 2013) (quoting Sherman v. Winco Fireworks, Inc., 532 F.3d 709, 715 (8th Cir.
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2008)). “[A] motion to amend should be denied on the merits ‘only if it asserts clearly
frivolous claims or defenses.’” Becker v. Univ. of Nebraska at Omaha, 191 F.3d 904, 908
(8th Cir. 1999) (quoting Gamma–10 Plastics, Inc. v. American President Lines, Ltd., 32
F.3d 1244, 1255 (8th Cir. 1994)).
It is appropriate to grant leave to amend here for several reasons. First, the Court
has already considered whether it would be possible for PSP to plead sufficient facts to
support a plausible federal antitrust claim. The Court concluded that such a pleading was
possible and therefore determined that it would be in the interest of justice to permit PSP
to file an amended complaint. Such a result is common after a court grants a motion to
dismiss, particularly in a complex case such as this. See Medafor, Inc. v. Starch Medical,
Inc., No. 09-cv-441, 2009 WL 2163580, at *2 (D. Minn. July 16, 2009) (permitting party
to file amended complaint “to cure the deficiencies identified in this opinion”); In re Buca
Inc. Sec. Lit., No. 05-cv-1762, 2006 WL 3030886, at *17 (D. Minn. Oct. 16, 2006)
(granting leave to file new complaint “focusing” on deficiencies raised by court’s order
granting motion to dismiss); In re Navarre Corp. Sec. Lit., No. 05-cv-1151, 2006 WL
1795141, at *4 (D. Minn. June 28, 2006) (granting leave to replead following decision on
motion to dismiss). The Court’s decision is also consistent with United States Supreme
Court precedent holding that decisions should be reached on the merits of claims, rather
than on “mere technicalities.” Foman v. Davis, 371 U.S. 178, 181 (1962). 1 The District
Judge expressly adopted this Court’s recommendation on this issue. As a result, the Court

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The Court noted, however, that PSP should receive only one more opportunity to amend its complaint.

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sees no reason to now alter its conclusion on this issue.
Second, the crux of Prime’s argument is that PSP’s proposed amendments are futile.
A motion for leave to amend a pleading is futile when the amended pleading would not be
able to withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Zutz
v. Nelson, 601 F.3d 842, 850 (8th Cir. 2010). As a result, were the Court to consider the
futility of PSP’s proposed amendments, it would be, at least indirectly, ruling on the merits
of that motion. A motion to dismiss under Rule 12(b)(6), however, is a dispositive motion
that the District Judge must hear directly or review via a Report and Recommendation from
the Magistrate Judge. D. Minn. L.R. 7.1(c)(6)(B). Therefore, it is more appropriate for this
Court to “permit the amendment” and allow the claims to go forward, so that they may be
considered in a proper motion to dismiss. Arcaro v. City of Anoka, No. 13-cv-2772, 2014
WL 12605451, at *3, (D. Minn. July 16, 2014). Such a result would ensure that the parties
litigate this matter in front of the appropriate judge and pursuant to the briefing schedule
and procedure provided for in this district’s local rules. See D. Minn. L.R. 7.1(c)(1)-(3); D.
Minn. L.R. 7.1(c)(5)(iii). This process would facilitate a proper decision on the merits of
PSP’s complaint. 2
Finally, Prime provides no compelling reason why PSP’s motion should be
dismissed on non-futility grounds. Prime merely alleges that PSP’s undue delay in bringing

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Prime filed a letter identifying a number of cases, including several decided by this Court, where a motion
to amend was denied on futility grounds. (ECF No. 80). In this case, however, the Court already determined
that PSP should be permitted to file an amended complaint in its Report and Recommendation and the
District Judge adopted that recommendation. Moreover, the complex and involved nature of this case
requires that the merits of the amended complaint be considered in a more orderly fashion through a proper
motion to dismiss.

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this motion warrants relief. But undue delay alone “is insufficient to deny leave to amend
a complaint.” IBEW Local 98 Pension Fund v. Best Buy Co., Inc., 326 F.R.D. 513, 527 (D.
Minn. 2018) (citing Buder v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 644 F.2d 690,
694 (8th Cir. 1981)). Instead, there must be some showing that undue delay will cause the
non-moving party to suffer unfair prejudice. Id. Prime does not, however, identify what, if
any, prejudice it will suffer from PSP’s delay. Thus, the Court will grant PSP’s motion.
It is unusual for the Court to decide a motion like this on the papers, particularly
when a hearing has been scheduled on the matter. But it is apparent from the parties’
submissions that there has been a breakdown in communication between the respective
sides. Neither party has been able to file a submission regarding this motion without the
other side seeking an “urgent” telephone conference with the Court, usually within a day
or so of the relevant filing. If PSP were now permitted to file a reply brief, Prime would
likely seek an opportunity to file a sur-reply brief. In fact, it would be quite reasonable for
Prime to do so, given that the parties are essentially attempting to turn a motion for leave
to amend into a motion to dismiss. In a motion to dismiss, Prime would be the moving
party and therefore would ordinarily be permitted to make the final written submission to
the Court before oral argument.
The parties’ respective positions make clear that while the only issue before the
Court is whether leave to amend should be granted, they are ready to litigate a motion to
dismiss. That is exactly what the Court will permit to happen. PSP shall be given seven
days to file their amended complaint. Prime will then have an opportunity to respond to
that complaint in the manner it sees fit. Should Prime move to dismiss, this matter will be
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ripe for consideration by the appropriate court after having been briefed via the appropriate
briefing schedule.
The Court appreciates that this is a complex case and that there is considerable
tension between the parties, given their long-running dispute. It is the Court’s hope,
however, that the parties will have meaningful meet-and-confers to explore ways to
proceed in a more orderly and less contentious manner on any future need for dispositive
and non-dispositive motion practice. 3
III.

CONCLUSION
Based on the foregoing, and all the files, records, and proceedings herein, IT IS

HEREBY ORDERED that:
1. Plaintiff’s Motion for Leave to File Second Amended Complaint. (ECF No. 68) is
GRANTED. Plaintiff shall file its amended complaint within seven days of the date of this
Order.
2. The April 24, 2019 motion hearing on this matter is hereby stricken from the Court’s
calendar.
3. All prior consistent orders remain in full force and effect.
4. Failure to comply with any provision of this Order or any other prior consistent
order shall subject the non-complying party, non-complying counsel and/or the party such
counsel represents to any and all appropriate remedies, sanctions and the like, including

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For example, it is the Court’s experience that when futility is the basis for opposing an amended complaint,
counsel are ordinarily able to stipulate to the filing of an amended complaint, followed by a briefing
schedule for a motion to dismiss.

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without limitation: assessment of costs, fines and attorneys’ fees and disbursements; waiver
of rights to object; exclusion or limitation of witnesses, testimony, exhibits, and other
evidence; striking of pleadings; complete or partial dismissal with prejudice; entry of whole
or partial default judgment; and/or any other relief that this Court may from time to time
deem appropriate.

Date: April 19, 2019

s/ Tony N. Leung
Tony N. Leung
United States Magistrate Judge
District of Minnesota
Physician Specialty Pharmacy, LLC v.
Prime Therapeutics, LLC
No. 18-cv-1044 (MJD/TNL)

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