Centene Pharmacy Services, Inc. v. CaremarkPCS Health, L.L.C. et al

Filing 36

MEMORANDUM AND ORDER... IT IS HEREBY ORDERED that Defendants' Motion to Stay Discovery, Doc. [ 30 ], is DENIED. Signed by District Judge Sarah E. Pitlyk on 1/6/2025. (NEP)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CENTENE PHARMACY SERVICES, INC.,
v.

Plaintiff,

CAREMARK PCS HEALTH, L.L.C., et al.,
Defendants.

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No. 4:24-cv-00804-SEP

MEMORANDUM AND ORDER
Before the Court is Defendants’ Motion to Stay Discovery, Doc. [30]. The motion is
fully briefed and ready for disposition. See Docs. [31], [32]. For the reasons set forth below, the
motion is denied.
BACKGROUND
This case involves a dispute between Plaintiff Centene Pharmacy Services, Inc., and
Defendants Caremark PCS Health, L.L.C., and CVS Caremark Part D Services, L.L.C.,
(collectively, “Caremark”) concerning certain provisions of the parties’ contractual agreements.
Centene “provides managed care and health insurance services to individuals and families
throughout the country.” Doc. [21] ¶ 1. Centene hired Caremark to manage its pharmaceutical
benefits program. Id. ¶ 3. The parties’ relationship was “governed by the Pharmacy Claims
Processing Agreement (‘Pharmacy Agreement’) and the Prescription Benefit Services
Agreement for Medicare Part D (‘Part D Agreement’) (collectively, the ‘Agreements’).” Id.
Under the Agreements, Caremark processed Centene’s pharmaceutical drug reimbursements. Id.
¶ 5. To that end, Centene “funded its own earmarked bank account . . . , [and] Caremark [ ] used
the money from that account to pay pharmacies for drugs dispensed to Centene’s members.” Id.
According to Centene, “[o]ver the past years, the Department of Justice exposed a
sprawling price-fixing conspiracy between generic pharmaceutical manufacturers to illegally
raise prices, including for drugs acquired by Centene’s members and paid for using Centene’s
earmarked bank account.” Id. ¶ 6. And even though “Centene ultimately paid for the drugs its
members bought at CVS pharmacies, including overcharges stemming from the conspiracy, it
lacks federal antitrust standing to sue for those losses under the Sherman Act and certain state
antitrust laws.” Id. ¶ 7. To account for such a situation, “the Agreements require Caremark to
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assign any claims to Centene’s Plan Sponsors or Part D Plan Sponsors where only a Caremark
Affiliate has standing to pursue the claims.” Id. Because “CVS Pharmacy is a Caremark
Affiliate with exclusive standing to pursue federal antitrust claims over Centene’s purchases at
CVS pharmacies,” Plaintiff alleges, the conditions for assignment have been triggered, but
Caremark refuses to assign the generic drug antitrust claims to the Plan Sponsors under the
Agreements. Id. ¶¶ 7-8.
Plaintiff seeks a declaration of the rights and obligations of the parties under the
Agreements and specific performance requiring Caremark to cause CVS Pharmacy to assign
federal and certain state antitrust claims. Id. at 14. Defendants filed a Motion to Dismiss, Doc.
[22], and then moved for a stay pending the Court’s ruling on the motion to dismiss. Doc. [30].
LEGAL STANDARD
Under Federal Rule of Civil Procedure 26(c), a party may move the court for a protective
order staying or limiting the scope of discovery; however, a court may issue such an order only
upon the movant’s showing of good cause. See T.E. Connectivity Networks, Inc. v. All Systems
Broadband, Inc., 2013 WL 4487505, at * 1 (D. Minn. Aug. 20, 2013). “It, of course, is black
letter law that the mere filing of a motion to dismiss the complaint does not constitute ‘good
cause’ for the issuance of a discovery stay.” Id. at *2 (quoting Chesney v. Valley Stream Union
Free Sch. Dist. No. 24, 236 F.R.D. 113, 115 (E.D.N.Y.2006)). In determining whether to stay
discovery pending disposition of a motion to dismiss, courts consider the following four factors:
(1) whether the movant has shown a likelihood of success on the merits of the dispositive
motion;
(2) hardship or inequity to the moving party if the matter is not stayed;
(3) prejudice to the non-moving party [if the matter is stayed]; and
(4) the conservation of judicial resources.
Physicians Home Health Infusion, P.C. v. UnitedHealthcare of the Midwest, Inc., 2019 WL
4644021, at *3 (E.D. Mo. Sept. 24, 2019). The decision to stay discovery is “generally practical
and . . . left largely to the court’s discretion.” Id. (quoting Dufrene v. ConAgra Foods, Inc., 2016
WL 10651947, at *2 (D. Minn. Apr. 7, 2016)).
DISCUSSION
Even assuming that Defendants have shown a likelihood of success on the merits of their
motion to dismiss, the Court finds that none of the other factors weigh in favor of granting a stay.
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Defendants argue that “allowing discovery to proceed while Defendants’ motion to
dismiss is pending would subject Defendants to potentially burdensome and expensive
discovery.” Doc. [31] at 5. According to Defendants, discovery “may require the parties to
search for and produce documents, including electronic communications, going back over a
decade,” and “may require deposition testimony from witnesses who were involved in the
negotiation and drafting processes for both the agreements and their amendments.” Id. Those
arguments are unpersuasive at this stage of this case. As Defendants concede, “this case
involves a limited set of claims and parties.” Id. Moreover, the parties have not even served
discovery requests, so any claim that discovery will be “burdensome” and “expensive” is
speculative at this point. See Wild v. Rockwell Labs, Ltd., 2020 WL 1892307, *2 (W.D. Mo.
Apr. 16, 2020) (“Defendants acknowledge that Plaintiff has yet to propound discovery. As a
result, Defendants have not shown that the breadth of unserved discovery supports a stay.”).
And as Plaintiff notes in its response, “[Plaintiff] does not anticipate beginning any depositions
until after the motion to dismiss has been ruled [on].” Doc. [32] at 6. So it appears that the
parties agree that at least some discovery can be delayed until the motion to dismiss is ruled on.
Under such circumstances, the Court cannot find that Defendants will face hardship or inequity if
the matter is not stayed. Thus, the second factor weighs against a stay.
Although a closer call, the third factor also weighs slightly against a stay. Even though
this case is in its early stages, Plaintiff claims it will be prejudiced by a stay of discovery.
Because the contract at issue was entered into in late 2013, Plaintiff asserts that there is a
heightened risk of lost evidence or diminished witness recall. Doc. [32] at 8. Plaintiff also
maintains that “the longer this case remains pending, the increased chances CVS Pharmacy
makes litigation decisions that may prejudice the claims which are rightfully Centene’s.” Doc.
[32] at 9. Plaintiff raises legitimate concerns, and while the Court recognizes Defendants’
argument that Plaintiff’s commencement of this action nearly three-and-a-half years after CVS
filed its antitrust complaint cuts against a finding of prejudice, the Court does not find that
Plaintiff’s delay weighs so heavily as to tip the balance in favor of Defendants on this factor.
Finally, the fourth factor weighs against a stay. In determining whether a stay would
conserve judicial resources, “a court examines the breadth of any pending discovery and whether
the pending dispositive motion has the potential to resolve the litigation.” Physicians Home
Health Infusion, 2019 WL 4644021, at *6 (quoting Dufrene, 2016 WL 10651947, at *4). While
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it is true that Defendant’s motion to dismiss has the potential to resolve the entire case, this case
involves a limited set of claims and parties, and the breadth of discovery is speculative at this
point. Further, it appears that the parties may be able to limit the scope of discovery while the
Court considers Defendants’ motion to dismiss. As such, the Court finds that the fourth factor
weighs against granting Defendants’ motion to stay.
For the foregoing reasons, Defendants have failed to show that a stay is warranted in this
case. Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion to Stay Discovery, Doc. [30], is
DENIED.
Dated this 6th day of January, 2025.

SARAH E. PITLYK
UNITED STATES DISTRICT JUDGE

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