Mission Specialty Pharmacy, LLC v. OptumRX, Inc.
ORDER DENYING 29 Motion for Sanctions. Signed by Judge David A. Ezra. (aej)
THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
ORDER DENYING PLAINTIFF’S EMERGENCY MOTION FOR SANCTIONS
On December 18, 2015, Mission Specialty Pharmacy (“Mission
Pharmacy” or “Plaintiff”) filed an Emergency Motion for Sanctions. (Dkt. # 29.)
Pursuant to Local Rule 7(h), this Court finds the matter is suitable for disposition
without a hearing. W.D. Tex. Civ. R. 7(h). After careful consideration of the
memoranda in support of and in opposition to the motion, the Court, for the
reasons that follow, DENIES Plaintiff’s Emergency Motion for Sanctions. (Dkt.
Mission Pharmacy is an independent retail pharmacy in San Antonio
which provides both conventional and compounded prescription medications to
patients. (“Am. Compl.,” Dkt. # 25 ¶ 9.) According to Mission Pharmacy,
compounded pharmaceuticals are different from conventional prescription
medications because they can be customized to meet specific patients’ needs. (Id.
OptumRx, Inc. (“OptumRx” or “Defendant”) is a pharmacy benefit
manager. (Am. Compl. ¶ 11.) On August 29, 2012, OptumRx entered into a
Pharmacy Network Agreement (the “Agreement”) with Morris & Dickson Co.
LLC d/b/a Community Independent Pharmacy Network (“CIPN”). (Id. ¶ 12.)
Mission Pharmacy joined the CIPN and became party to the Agreement on July 9,
2013. (Id.) The Agreement requires OptumRx to pay Mission Pharmacy for
covered pharmaceuticals it dispenses to OptumRx patients, and contains a clause
titled “No Mail Fulfillment or Solicitation,” but does not define mail. (Id. ¶¶ 13–
14.) On June 2, 2015, OptumRx issued a letter to Mission Pharmacy and all other
pharmacies contracting through CIPN explaining that OptumRx was terminating
the Agreement with CIPN, and inviting Mission Pharmacy and other community
pharmacies “to contract directly with OptumRx.” (Id. ¶ 22; Dkt. # 8, Ex. C-4.)
On August 31, 2015, OptumRx issued a Cease and Desist Letter (the
“Letter”) demanding that Mission Pharmacy stop sending prescriptions through the
mail to patients, and advising that failure to respond “could result in further
disciplinary action, up to and including suspension of payment and termination”
from the OptumRx Pharmacy Network. (Am. Compl. ¶ 23; Dkt. # 8, Ex. C-5.)
Mission Pharmacy responded that the Agreement did not prohibit mailing
prescriptions, and continued to ship prescriptions. (Am. Compl. ¶ 24.) On
October 6, 2015, Mission Pharmacy filed suit in the 150th Judicial District Court
of Bexar County, Texas seeking a Temporary Restraining Order (Dkt. # 1, Ex. A
¶¶ 32–46), as well as injunctive relief preventing OptumRx from terminating
Mission Pharmacy from the pharmacy network for shipping prescriptions through
the mail. (Id. ¶¶ 47–49.) On October 14, 2015, OptumRx removed the case to this
Court on the basis of diversity. (Id.)
On October 22, 2015, OptumRx sent an e-mail to Mission Pharmacy
stating that OptumRx would “not notify OptumRx’s members or prospective
members of any non-participation status of Mission Pharmacy in OptumRx’s
pharmacy provider network before the earlier of December 15, 2015 or when the
Court rules on the application for preliminary injunction.” (Dkt. # 29, Ex. A.)
However, at least one patient received a letter dated December 10, 2015, notifying
him or her that Mission Pharmacy will no longer be part of the OptumRx
Pharmacy Network as of January 1, 2016. (Dkt. # 29, Ex. B.) On December 15,
2015, the Pharmacy received “a number of telephone calls from patients”
regarding OptumRx’s notice of termination, and at least one phone call “from
another local pharmacy indicating that a Mission Pharmacy patient was
transferring prescriptions away from Mission Pharmacy as a result of a termination
notice from Optum.” (Dkt. # 31 ¶¶ 4–5.)
On December 18, 2015, Mission Pharmacy filed the instant
Emergency Motion for Sanctions. (Dkt. # 29.) OptumRx responded on December
22, 2015. (Dkt. # 32.) Plaintiff filed a response on December 23, 2015. (Dkt.
District courts derive sanctioning authority from three different
sources: the Federal Rules of Civil Procedure, the United States Code, and the
inherent powers of the Court. See Fed. R. Civ. P. 11; 28 U.S.C. § 1927; F.D.I.C. v.
Maxxam, Inc., 523 F.3d 566 (5th Cir. 2008). Where a Court issues a sanction
against a party, the sanction “should be tailored to fit the particular wrong,” and
should “foster the appropriate purpose of the rule, depending on the parties, the
violation, and the nature of the case.” Topalian v. Ehrman, 3 F.3d 931, 936 (5th
Cir. 1993) (quoting Thomas v. Capital Sec. Serv., Inc., 836 F.2d 866, 877 (5th Cir.
Plaintiff’s Emergency Motion for Sanctions requests that this Court
(1) enjoin OptumRx from sending any further notices to members or prospective
members regarding Mission Pharmacy’s status with OptumRx, and (2) compel
OptumRx to rescind all termination notices already issued to members and
prospective members. (Dkt. # 29 at 4.)
A. Applicability of Rule 11 Sanctions
The Federal Rules of Civil Procedure permit a court to sanction an
attorney for “presenting to the court a pleading, written motion, or other paper . . .
being presented for any improper purpose, such as to harass,” for making
arguments not “warranted by existing law,” or for making “factual contentions”
without “evidentiary support.” Fed. R. Civ. P. 11(b). Rule 11 is meant “to deter
baseless filings in district court and . . . streamline the administration and
procedure of the federal courts.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,
393 (1990). Rule 11 authorizes sanctions for “filing excessive motions . . . even if
the motions were well-founded in law or fact.” Whitehead v. Food Max of Miss.,
Inc., 332 F.3d 796, 805 (5th Cir. 2003). Rule 11 sanctions are limited to
sanctioning improper filings to the Court. Jenkins v. Methodist Hosp. of Dallas,
Inc., 478 F.3d 255, 265 (5th Cir. 2007) (finding that the purpose of Rule 11 is to
enforce a lawyer’s duty to “‘stop-and-think’ before . . . making legal or factual
contentions” to the Court) (quoting Fed. R. Civ. P. 11 advisory committee’s note to
Mission Pharmacy does not allege that OptumRx made any improper
filing or misrepresentation to the Court. Rather, Mission Pharmacy alleges that
OptumRx sent out notice to its policyholders regarding Mission Pharmacy’s
termination from the network five days before it had privately agreed to do so.
Accordingly, Rule 11 sanctions are inapplicable here.
B. Applicability of Sanctions Under 28 U.S.C. § 1927
Pursuant to statute, the Court may sanction an attorney “who so
multiplies the proceedings in any case unreasonably and vexatiously . . . to satisfy
personally the excess costs, expenses, and attorneys’ fees reasonably incurred
because of such conduct.” 28 U.S.C. § 1927. “Punishment under this statute is
sparingly applied, and except when the entire course of proceedings were
unwarranted and should neither have been commenced nor persisted in, an award
under 28 U.S.C. § 1927 may not shift the entire financial burden of an action’s
defense.” Scarlott v. Nissan N. Am., Inc., 771 F.3d 883, 892 (5th Cir. 2014)
(quoting Meadowbriar Home for Children, Inc. v. Gunn, 81 F.3d 521, 535 (5th Cir.
1996)). Sanctions awarded “under § 1927 [are] penal in nature,” and this statute is
strictly construed “so that the legitimate zeal of an attorney i[n] representing her
client is not dampened.” Scarlott, 771 F.3d at 892–93 (quoting Browning v.
Kramer, 931 F.2d 340, 344 (5th Cir. 1991)).
Sanctions awarded pursuant to 28 U.S.C. § 1927 are limited, and
available only to impose monetary penalties against a party who unreasonably
extends litigation. Here, where Mission Pharmacy makes no claim that OptumRx
is unreasonably extending litigation, and where Mission Pharmacy does not request
monetary sanctions, 28 U.S.C. § 1927 is inapplicable.
C. Applicability of Sanctions Under Court’s Inherent Authority
“Courts of justice are universally acknowledged to be vested, by their
very creation, with power to impose silence, respect, and decorum, in their
presence, and submission to their lawful mandates.” Chambers v. NASCO, Inc.,
501 U.S. 32, 43 (1991) (quoting Anderson v. Dunn, 6 Wheat. 204, 227 (1821)).
Such powers are “governed not by rule or statute but by the control necessarily
vested in courts to manage their own affairs so as to achieve the orderly and
expeditious disposition of cases.” Chambers, 501 U.S. at 43 (quoting Link v.
Wabash R. Co., 370 U.S. 626, 630–31 (1962)). A district court only “has the
inherent authority to impose sanctions ‘in order to control the litigation before it.’”
Positive Software Sol., Inc. v. New Century Mortg. Corp., 619 F.3d 458, 460 (5th
Cir. 2010) (quoting NASCO, Inc. v. Calcasieu Tel. & Radio, Inc., 894 F.3d 696,
703 (5th Cir. 1990)). The court’s inherent sanctioning power “may be exercised
only if essential to preserve the authority of the court and the sanction chosen must
employ the least possible power adequate to the end proposed.” Scaife v. Assoc.
Air Ctr. Inc., 100 F.3d 406, 411 (5th Cir. 1996) (quoting Natural Gas Pipeline Co.
of Am. v. Energy Gathering, Inc., 86 F.3d 464, 467 (5th Cir. 1996)). The court
may only sanction conduct where this conduct is “in direct defiance of the
sanctioning court.’” Positive Software, 619 F.3d at 460 (quoting CJC Holdings,
Inc. v. Wright & Lato, Inc., 989F.3d 791, 794 (5th Cir. 1993)) see also Chambers,
501 U.S. at 44 (finding that a court may sanction conduct that constitutes
“disobedience to the orders of the Judiciary”).
Here, Plaintiff only alleges that Defendant violated an agreement
between itself and the Plaintiff, commemorated by the October 22, 2015 e-mail.
Importantly, Mission Pharmacy does not allege that OptumRx violated an order
from this Court. This Court cannot find any precedent, and Mission Pharmacy
cites no precedent, which would permit it to order specific performance as a
sanction against a party for violating a private agreement.
Having found that the alleged conduct does not justify the imposition
of the requested sanctions under any of the Court’s sanctioning authority, this
Court, for the reasons stated above, DENIES Mission Pharmacy’s Emergency
Motion for Sanctions. (Dkt. # 29.)
IT IS SO ORDERED.
DATED: December 30, 2015, San Antonio, TX
David Alan Ezra
Senior United States Distict Judge
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