of innesota court · pdf filevs. cvs caremark corporation; cvs pharmacy, ... sears, roebuck...
TRANSCRIPT
NO. A12-1555
S t a t e of M innesota
I n S u p r e m e CourtGRAPHIC COMMUNICATIONS LOCAL 1B HEALTH & WELFARE
F U N D " A " a n d t h e T W I N T C I T I E S B A K E R Y D R IVE R S H E A T T HU 1 l
AND WELFARE FUND, individually and on behalf of all others similarly situated,
Plain tiffs I Respondents I Cross-Appellants) VS.
CVS CAREMARK CORPORATION; CVS PHARMACY, INC.; CAREMARI<, LLC; CAREMARK MINNESOTA SPECIALTY PHARMACY, LLC; CAREMARK MINNESOTA SPECIALTY
PHARMACY HOLDING, LLC; CO BORN'S, INCORPORATED; KMART HOLDING CORPORATION; SEARS, ROEBUCK AND CO.;
SEARS HOLDING CORPORATION; SNYDER'S DRUG STORES (2009), INC.; SNYDER'S HOLDINGS (2009), INC.; SNYDER'S
HOLDINGS, INC.; TARGET CORPORATION; WALGREEN CO.; and WAL-MART STORES, INC.,
1 '. 1 ue;enaants; Petitioners/Cross-Respondents
PLAINTIFFS/RESPONDENTS/CROSS-APPELLANTS' REPLY BRIEF IN SUPPORT OF CROSS-APPEAL
David L Hashmall (#138162) FELHABER, LARSON, FENLON & VOGT, P.A. 220 South Sixth Street, Suite 2200 Minneapolis, MN 55402 (612) 339-6321
Perrin Rynders (admitted pro hac vice)
Bryan R. Walters VARNUMLLP Bridgewater Place P.O. Box 352
John W. Barrett BAILEY & GLASSER LLP 209 Capitol Street Charleston, WV 25301 (304) 345-6555
Grand Rapids, MI 49501-0352 (616) 336-6000
Attornrys for P laintijfs I Respondents I Cross -Appellants
2013- BACHMAN LEGAL PRINTING- FAX (612) 337-8053- PHONE (612) 339-9518 or 1-800-715-3582
Lewis A. Remele, Jr. (#90724) Christopher R. Morris (#230613) BASSFORD REMELE Attorneys for Defendants/ Appellees
CVS/Caremark 33 South Sixth Street, Suite 3800 Minneapolis, MN 55402-3707 (612) 333-3000
Tracy J. Van Steenburgh (#141173) NILAN JOHNSON LEWIS, PA Attorneys for Defendants/ Appellees
Kmart/Sears 400 One Financial Plaza 120 South Sixth Street r-Ainneapolis, l-AJ'..J 5 5402 (612) 305-7500
Wendy J. Wildung (#117055) Craig S. Coleman (#0325491) F AEGRE BAKER DANIELS LLP Attorneys for Defendant/ Appellee Target 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 5 5402 (612) 766-7000
David R. Marshall (#184457) Joseph J. Cassioppi (#388238) FREDRIKSON & BYRON, P .A. Attorneys for Defendant/ Appellee Walmart 200 South Sixth Street, Suite 4000 Minneapolis, MN 55402 (612) 492-7000
Kevin D. Hofman (#0179978) Ronald B. Peterson (#0086344) HALLELAND HABICHT, P.A. Attorneys for Defendant/ Appellee Co born's 33 South Sixth Street, Suite 3900 Minneapolis, MN 55402 (612) 836-5500
James K. Langdon (#171931) DORSEY & WHITNEY Attorneys for Defendants/ Appellees
Snyders 50 South Sixth Street, Suite 1500 Minneapolis, MN 55402 (612) 340-2600
Todd A. Noteboom (#240047) Elizabeth Wiet Reutter (#316957) LEONARD, STREET AND DEINARD Attorneys for Defendant/ Appellee
Walgreen 150 South Fifth Street, Suite 2300 Minneapolis, MN 55402 (612) 335-1500
Attorneys for Defendants/Petitioners/Cross-Appellees
TABLE OF CONTENTS
Table of Citations ................................................................................................................ ii
I. Introduction .............................................................................................................. 1
II. Argument .................................................................................................................. 2
A. The Defendant Pharmacies' Attempt to Impose an Express Cause of Action Requirement Must Be Rejected ........................................................ 2
B. Permitting Purchasers to Sue to Recover the Monetary Savings the Legislature Mandated They Receive Effectuates the Legislature's Intent ............................................................................................................. 4
1. The Flour Exchange Factors Are Guides for Discerning the Legislature's Intent ............................................................................. 4
2. The Flour Exchange Factors Are Met, Confirming that a Civil Action Should Be Inferred to Effectuate the Legislature's Intent ............................................................................. 6
a. The Defendant Pharmacies Misstate the Purchasers' Application of the Flour Exchange Factors ............................ 7
b. The Defendant Pharmacies' Argument that the Generic Drug Pricing Law Does Not Create a Right for the Purchasers to Specific Monetary Savings Is Baseless .......... 10
c. The Defendant Pharmacies' Argument that a Right of Action Would Interfere with the Statutory Scheme for Regulating the Pharmacy Industry Should Be Rejected ....... 13
III. Conclusion .............................................................................................................. 15
TABLE OF CITATIONS
Page(s)
Cases
Alexander v. Sandoval, 532 U.S. 275 (2001) .................................................................... 13
Alliance for Metro. Stability v. Metro Council, 671 N.W.2d 905 (Minn. Ct. App. 2003) ............................................................................................ 11
Becker v. Mayo Found., 737 N.W.2d 200 (Minn. 2007) .................................................... 3
Cannon v. Univ. of Chicago, 441 U.S. 677 (1979) ........................................... 4, 10, 11, 12
Dukowitz v. Hannon Sec. Serv., 815 N.W.2d 848 (Minn. Ct. App. 2012) ...................... 5, 8
Flour Exchange Bldg. Corp. v. State of Minn., 524 N.W.2d 496 (Minn. Ct. App. 1994) ............................................................................................ 13
Gonzaga Univ. v. Doe, 536 U.S. 273 (2002) .................................................................... 13
Haage v. Steies, 555 N.W.2d 7 (Minn. App. 1996) ............................................................ 7
Knopp v. Gutterman, 102 N.W.2d 689 (Minn. 1960) ......................................................... 2
Maimonides Med'l Ctr v. 1st United Am. Life Ins. Co., 941 N.Y.S.2d 447 (N.Y. Sup. 2012) ........................................................................ 9
Marine Credit Union v. Detlefson-Delano, 830 N.W.2d 859 (Minn. 2013) ...................... 2
Starko Inc. v. Presbyterian Health Plan, 276 P.3d 252 (N.M. Ct. App. 2011) ...... 8, 11, 12
Thompson v. Thompson, 484 U.S. 174 (1988) ........................................................ 2, 3, 4, 6
Wilder v. Va. Hosp. Ass'n, 496 U.S. 498 (1990) ............................................................... 11
Statutes
Minn. Stat. § 151.21, subd. 4 .......................................................................... 1, 2, 4, 11, 15
Minn. Stat. § 645.16 ............................................................................................................ 3
Other Authorities
Restatement (Second) of Tort§ 874A .............................................................................. 15
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I. INTRODUCTION
The basic framework of this case is straightforward and undisputed:
1. Plaintiffs purchased generic prescription drugs from the Defendant Pharmacies on numerous occasions.
2. When selling generic prescription drugs, the Defendant Pharmacies are required to pass on to the Purchasers the difference between the acquisition cost to the pharmacy of the generic drug dispensed and its brand-name equivalent. Minn. Stat. § 151.21, subd. 4 ("Generic Drug Pricing Law").
3. The Defendant Pharmacies failed to pass these savings on to the Purchasers.
4. The Purchasers had no way of knowing that they did not receive these savings because (a) the Defendant Pharmacies kept their acquisition costs confidential; and (b) the Defendant Pharmacies did not disclose that they had not passed on these savings.
There are two fundamental questions facing this Court. The first is whether the
Defendant Pharmacies' practice of overcharging the Purchasers for generic prescription
drugs and concealing those overcharges (and the facts from which the Purchasers could
have determined they had been overcharged) could be found by the trier of fact to be a
deceptive practice under the Consumer Fraud Act. This is the subject of the Defendant
Pharmacies' appeal.
The second question, which is the subject of the Purchasers' cross-appeal, is
whether the Purchasers also have an implied right to sue under the Generic Drug Pricing
Law to recover the money that was wrongfully withheld from them by the Defendant
Pharmacies. This Court should find that the Generic Drug Pricing Law creates an
implied right of action in favor of the Purchasers, independent of their right to sue the
Defendant Pharmacies for deceptive practices under the Consumer Fraud Act.
1
II. ARGUMENT
A. THE DEFENDANT PHARMACIES' ATTEMPT TO IMPOSE AN EXPRESS CAUSE OF ACTION REQUIREMENT MUST BE REJECTED.
The Defendant Pharmacies emphasize that the legislature's intent is dispositive
when determining whether a civil action should be inferred. See Defs.' Resp./Reply Br.
at 30-31. The Purchasers agree. But unlike the Defendant Pharmacies, the Purchasers
do not ignore the source from which the legislature's intent is determined: the language of
the statute itself. See Marine Credit Union v. Detlefson-Delano, 830 N.W.2d 859, 864
(Minn. 20 13 )("We determine legislative intent primarily from the language of the statute
itself'). Tellingly, the Defendant Pharmacies do not quote the language of the Generic
Drug Pricing Law once in their entire 37-page Response/Reply brief.
"Any difference between acquisition cost to the pharmacist of the drug dispensed
and the brand name drug prescribed shall be passed on to the purchaser." Minn. Stat.
§ 151.21, subd. 4. This statute confers a direct, beneficial right to specific monetary
savings on purchasers. It is implicit in the language of the statute itself that the
legislature intended purchasers to be able to sue in court to recover what the legislature
mandated they receive. See Knopp v. Gutterman, 102 N.W.2d 689, 695 (Minn.
1960)("that which is implied in a statute is as much a part of it as that which is
expressed"); Thompson v. Thompson, 484 U.S. 174, 179 (1988)("We therefore have
recognized that Congress' 'intent may appear implicitly in the language or structure of the
statute, or in the circumstances of its enactment"' (emphasis added, citation omitted)).
2
The Defendant Pharmacies concede that a plaintiff may have an implied right of
action for violation of a statute if that is what the legislature intended. See Defs.'
Resp./Reply Br. at 26; Becker v. Mayo Found., 737 N.W.2d 200 (Minn. 2007).1 But they
then propose a standard from which a right of action could never be inferred, effectively
abrogating the doctrine.
The Defendant Pharmacies argue that a civil action cannot be inferred from the
language of a rights-creating statute itself. Rather, they suggest that there must be
something more: an expressed indication (in either the text of the statute or the legislative
history) of the legislature's intent to provide a civil action.
If an expressed indication of the legislature's intent to create a cause of action were
required (beyond the statutory language itself), then the implied cause of action doctrine
would be a "virtual dead letter." Thompson, 484 U.S. at 179 ("Our focus on
congressional intent does not mean that we require evidence that Members of Congress,
in enacting the statute, actually had in mind the creation of a private cause of action. The
implied cause of action would be a virtual dead letter were it limited to correcting
drafting errors when Congress simply forgot to codify its evident intention to provide a
1 Becker did not create a "presumption" against inferring a right of action. Providing that a statute does not give rise to a civil action unless the language is express or the intent to create a civil action can be determined by clear implication is the logical equivalent of stating that a statute does give rise to a civil action if the language is express or the intent to create a civil action can be determined by clear implication. The use of "not" and "unless" does not create a presumption. Having a presumption against implying a right of action would be inconsistent with the court's overarching duty to give effect to the legislature's intent. See Minn. Stat. § 645.16 ("The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature").
3
cause of action"). "Rather, as an implied cause of action doctrine suggests, 'the
legislative history of a statute that does not expressly create or deny a private remedy will
typically be equally silent or ambiguous on the question."' !d. (emphasis in original,
quoting Cannon v. Univ. ofChicago, 441 U.S. 677, 694 (1979)).2
The Defendant Pharmacies propose a test that not only nullifies the implied right
of action doctrine, but negates the legislature's intent. With respect to the legislature's
intent, one thing is known for certain: the legislature intended purchasers of generic
prescription drugs to receive specific monetary savings. See Minn. Stat. § 151.21, subd.
4. Contrary to the legislature's will, the Defendant Pharmacies misappropriated those
savings for themselves. To honor and effectuate the legislature's intent that purchasers
(not pharmacies) receive the savings in cost from generic prescription drugs, a right of
action under the Generic Drug Pricing Law must be inferred.
B. PERMITTING PURCHASERS TO SUE TO RECOVER THE MONETARY SAVIN(:;~ THR LF,{:;TSLATURE MANDATED THEY RECEIVE EFFECTUATES THE LEGISLATURE'S INTENT.
1. The Flour Exchange Factors Are Guides for Discerning the Legislature's Intent.
The Defendant Pharmacies contend that if the Flour Exchange three-factor test
does not apply, then the Purchasers' implied right of action argument must be "summarily
denied." They are wrong. Whether a right of action should be inferred depends on the
2 The Defendant Pharmacies rely on Justice Scalia's concurrence in Thompson, in which he suggests that the courts "get out of the business of implied private rights of action altogether." See Thompson, 484 U.S. at 192. While the Defendant Pharmacies certainly prefer, and seek to impose, this approach, it is not the law in Minnesota. Neither the United States Supreme Court nor any state court has adopted this approach. Minnesota should not be the first.
4
legislative intent, which is principally determined from the language of the statute. Since
the Generic Drug Pricing Law confers a direct, beneficial right on Purchasers (thus
indicating legislative intent to permit an implied action) and provides no alternative
means for Purchasers to secure their right (thus not indicating any legislative intent to
deny an implied action), it is implicit in the language of the statute itself that the
legislature intended Purchasers to be able to sue in court to recover their property.
In any event, the Defendant Pharmacies' argument that the Flour Exchange factors
should not be applied-on the theory that they are "outdated" and "distract[] ... from the
dispositive question of legislative intent"-is wrong. It is well-established that the Flour
Exchange factors are guides for discerning the legislature's intent when deciding whether
a right of action should be inferred. 3 As the Minnesota Court of Appeals recently
recognized:
"A statute does not give rise to a civil cause of action unless the language is explicit or can be determined by clear implication." Becker v. Mayo Found., 737 N.W.2d 200, 207 (Minn. 2007). In determining whether a cause of action can be implied, this court considers "(1) whether the plaintiff belongs to the class for whose benefit the statute was enacted; (2) whether the legislature indicated an intent to create or deny a remedy; and (3) whether implying a remedy would be consistent with the underlying purposes of the legislative enactment." Flour Exch. Bldg. Corp v. State, 524 N.W.2d 496,499 (Minn. Ct. App. 1994) ....
Dukowitz v. Hannon Sec. Serv., 815 N.W.2d 848, 852-53 (Minn. Ct. App. 2012).
3 While the Defendant Pharmacies agree that legislative intent is dispositive, they fail to identify any factors to consider in discerning the legislature's intent, even going so far to ignore the language of the Generic Drug Pricing Law entirely.
5
Likewise, the United States Supreme Court has recognized that these factors are
guides for discerning the legislature's intent when determining whether to infer a right of
action. See, e.g., Thompson, 484 U.S. at 179 ("In determining whether to infer a private
cause of action from a federal statute, our focal point is Congress' intent in enacting the
statute. As guides to discerning that intent, we have relied on the . . . factors set out in
Cortv. Ash ... " (emphasis added)).
This Court should affirm that the Flour Exchange factors are guides for discerning
the legislature's intent when determining whether to imply a right of action.4
2. The Flour Exchange Factors Are Met, Confirming that a Civil Action Should Be Inferred to Effectuate the Legislature's Intent.
The Defendant Pharmacies agree that no Minnesota court has ever been faced with
determining whether a right of action should be implied from a statute like the Generic
Drug Pricing Law-a statute that confers a direct beneficial right for purchasers of a
product to receive certain specific monetary savings, but provides no administrative
mechanism for purchasers to obtain those monetary savings. If a right of action is not
inferred from this statute, no statute could satisfY the test. The implied right of action
doctrine would be illusory, existing in name only. Denying purchasers of generic drugs
4 A court need not mechanically apply these factors in every implied right of action case if the legislature's intent is made clear by other indications. Becker is such a case. There, the legislature's intent to deny a right of action was clear, without need to resort to these three factors. See Pls.'/Resps.'/Cross-Appellants' Principal & Resp. Br. at 45, n.ll (explaining that, in Becker, the legislature's provision of an express cause of action for violation of an immediately adjacent subdivision of the same statute from which the plaintiffs sought to infer an action, evidencing the legislature's intent to exclude other civil actions).
6
the ability to sue to recover the monies owed to them would fail to effectuate, and indeed
undermine, the legislature's intent.
a. The Defendant Pharmacies Misstate the Purchasers' Application of the Flour Exchange Factors.
None of the Defendant Pharmacies' arguments challenging the application of the
_~_C?four Exclzarzge factors vvithstands scrutiny . .Lk'irst, the Defendant Pharmacies argue that
the Purchasers propose a "default position" whereby a plaintiff may sue for violation of a
statute if he falls within the class of persons benefited by the statute. But the Purchasers
do not suggest that satisfying the first factor alone is sufficient to infer a right of action.
There must also be rights-creating language indicating a legislature's intent to infer a right
of action. Two Minnesota Court of Appeals' decisions illustrate this point.
In Haage v. Steies, 555 N.W.2d 7 (Minn. App. 1996), the plaintiff sued his
entertainment agent for failing to have a license in violation of a statute, providing that
"[n]o person shall engage in or carry on the occupation of an entertainment agency
without procuring a license." Haage, 555 N.W.2d at 8. The statute was enacted for the
benefit of people who hire entertainment agents. The statute in Haage, however,
contained no rights-creating language indicating a legislative intent to provide a cause of
action. While entertainment agents had a duty to obtain a license before carrying on their
occupation, there was no language in the statute providing that people who hired
entertainment agents had any right to receive any statutorily-defined benefit from
entertainment agents.
7
The same is true in Dukowitz. There, the plaintiff claimed an implied right of
action under the unemployment laws to be free from retaliatory discharge for applying
for unemployment benefits. Dukowitz, 815 N.W.2d at 850-51. Even though the plaintiff
(as an unemployed person) was among the class of persons to be protected by the
unemployment laws in general, the court recognized that "the conduct proscribed by the
unemployment statutes does not include retaliation against an employee who applies for
benefits." I d. at 853. In other words, the statute did not provide the plaintiff the right
that she claimed.
Here, in contrast, Minn. Stat. § 151.21, subd. 4, expressly provides the Purchasers
the right that they claim: the right to receive specific monetary savings when a generic
prescription drug is dispensed. Unlike the statutes at issue in Haage or Dukowitz, the
Generic Drug Pricing Law "contains rights-creating language that gives Plaintiffs a
protected property right." Starko Inc. v. Presbyterian Health Plan, 276 P.3d 252, 267
(N.M. Ct. App. 2011)("[the statute] specifies the particular right attributable to Plaintiffs,
an amount of money that is clearly defined within the statute and a direction from the
Legislature that it be paid").
Second, the Defendant Pharmacies argue that the Purchasers' suggested approach
reduces the issue of whether to infer a right of action to one question: whether Minn. Stat.
§ 151.21, subd. 4, creates rights for them. While that is a critical question, it is not the
only one. Where a statute confers a direct beneficial right on a class of persons, it is
implicit in the language of the statute itself that there be a remedy to secure that right.
However, in such a case, the court must also inquire as to whether there is other evidence
8
that may indicate a legislative intent to foreclose a right of action. Furthermore, the court
must inquire as to whether implying a right of action would be consistent with the
underlying purposes of the legislative enactment. 5
Finally, the Defendant Pharmacies suggest that the fact that the legislature created
a disciplinary scheme to punish pharmacists, but did not expressly provide a private right
of action, "indicates that the legislature made a purposeful decision." See Defs.
Resp./Reply at 33. Not so. The existence of a general administrative enforcement
scheme, not tailored to secure a statutorily guaranteed property right, does not reveal a
legislative intent to preclude a cause of action. See, e.g., Maimonides Med'l Ctr v. 1st
United Am. Life Ins. Co., 941 N.Y.S.2d 447, 453 (N.Y. Sup. 2012)(rejecting argument
that an administrator's "investigatory powers and ... ability to levy fines ... [was]
evidence that the Legislature contemplated purely administrative enforcement"). The
following passage from the United States Supreme Court's opinion in Cannon is
instructive:
True, this Court has sometimes refused to imply private rights of action where administrative or like remedies are expressly available .... But it has never withheld a private remedy where the statute explicitly confers a benefit on a class of persons and where it does not assure those persons the ability to activate and participate in the administrative process contemplated by the statute .... Title IX not only does not provide such a mechanism, but
5 The Defendant Pharmacies suggest that not only must there be legislative intent to create a private right, but also legislative intent to create a civil remedy. There is no need to adopt this formulation, as this Court has established that legislative intent is necessary to imply a civil action, which is a legal suit to secure a remedy. Where, as here, the legislature conferred a right on a class of persons, there is no indication of legislative intent to preclude a civil action, and inferring an action is consistent with the underlying purpose of the legislative enactment, then a civil action should be inferred.
9
the complaint procedure adopted by [the federal agency] does not allow the complainant to participate in the investigation or subsequent enforcement proceedings. Moreover, even if those proceedings result in a finding of a violation, a resulting voluntary compliance agreement need not include relief for the complainant. ... Furthermore, the agency may simply decide not to investigate-a decision that often will be based on a lack of enforcement resources, rather than on any conclusion of the merits of the complaint.
Cannon, 441 U.S. at 707 n.41
Here, the legislature provided no administrative procedure for the Purchasers to
recover their monetary savings from the Defendant Pharmacies. Even the Defendant
Pharmacies concede this point. See Defs.' Resp./Reply at 32 (agreeing that the
Purchasers "do not have a way to recover money for alleged violations of [Minn. Stat.
§ 151.21, subd. 4]").
In their Response/Cross-Appeal Brief, the Purchasers noted that whether a civil
action should be inferred comes down to this question: Despite having granted purchasers
of generic prescription drugs the right to specific monetary savings, did the legislature
nonetheless intend to deny purchasers the ability to sue in court to recover those savings
by creating a Board of Pharmacy with no power to secure those savings from purchasers?
The answer remains no. It is unreasonable to infer that the legislature intended to deny
purchasers the right to sue in court to recover these savings.
b. The Defendant Pharmacies' Argument that the Generic Drug Pricing Law Does Not Create a Right for the Purchasers to Specific Monetary Savings Is Baseless.
"Any difference between acquisition cost to the pharmacist of the drug dispensed
and the brand name drug prescribed shall be passed on to the purchaser." Minn. Stat.
10
§ 151.21, subd. 4 (emphasis added). In the face of this plain language, the Defendant
Pharmacies argue that the Generic Drug Pricing Law does not create a right for
purchasers of generic prescription drugs to specific monetary savings. But the plain
language of the statute clearly grants them that right.
Nonetheless, the Defendant Pharmacies suggest that Minn. Stat. § 151.21, subd. 4,
merely creates a duty for pharmacists, directing what they "shall and 'shall not' do."
Every statute creates a duty. The question is whether the statute, in creating the duty,
confers a right on a specific class of persons. Many statutes create duties that do not
confer rights on a specific class of persons, such as when "a statute is phrased as a
directive to an agency." See, e.g., Alliance for Metro. Stability v. Metro Council, 671
N.W.2d 905, 916 (Minn. Ct. App. 2003)(refusing to imply civil action from statute,
providing: "the council shall prepare and adopt guidelines [for affordable housing]"). But
other statutes, like Minn. Stat. § 151.21, subd. 4, create duties that confer rights on a
specific class of persons.
By mandating that monetary savings for generic drugs "shall be passed on to the
purchaser," the legislature created a right for purchasers of generic drugs to specific
monetary savings. Minn. Stat.§ 151.21, subd. 4 (emphasis added); see Cannon, 441 U.S.
at 693, n.13 (1979)("the language of the statute explicitly confer[ s] a right directly on a
class of persons that included the plaintiff in the case"); Starko, 276 P.3d at 267 (statute
contained language that "gives Plaintiffs a protected property right in the reasonable
dispensing fee"); Wilder v. Va. Hasp. Ass'n, 496 U.S. 498, 510 (1990)("There can be little
doubt that health care providers are the intended beneficiaries of the Boren
11
Amendment ... [where the] provision establishes a system for reimbursement of
providers and is phrased in terms benefiting health care providers").
Given that the legislature has conferred the right to specific monetary savings for
purchasers of generic prescription drugs, it is implicit in the language of the statute itself
that the legislature intended purchasers to be able to sue in court to recover their property.
See Cannon, 441 U.S. at 693 n.13 ("this Court has never refused to imply a cause of
action where the language of the statute explicitly conferred a right directly on a class of
persons that included the plaintiff in the case"); Starko, 276 P.3d at 267 ("[the statute]
guarantee[ s] a property right in the dispensing fee and cost of the drug to dispensing
pharmacists. Therefore, there is implicit legislative intent to create an enforceable right
for ... Plaintiffs").6
Even the cases on which the Defendants Pharmacies rely recognize the importance
of rights-creating language for inferring a right of action. See, e.g., Alexander v.
6 The Defendant Pharmacies suggest that this Court should disregard Starko, claiming that the court in Starko "considered a wide variety of public policy arguments." See Defs.' Response/Reply at 34. That is false. When deciding whether to infer a right of action, the court focused solely on the same three factors that are applied in Minnesota for discerning the legislature's intent to infer a right of action. See Starko, 276 P.3d at 265 ("we address the three factors that may contribute to the recognition of a private cause of action based upon legislative intent").
No Minnesota court has had to determine whether a right of action should be implied from a statute that confers a property right on a class of persons. But the Starko court did precisely that. See id. at 266 (interpreting statute that "contains rights-creating language that gives Plaintiffs a protected property right"). Applying the same factors that Minnesota courts (and courts throughout the country) apply for examining legislative intent to determine whether a right of action should be inferred, the Starko court held "that the Legislature intended to provide an implied right of action under the statute." !d. at 267. The same conclusion should be reached here.
12
Sandoval, 532 U.S. 275, 288 (2001)("It is immediately clear that the 'rights-creating'
language so critical to the Court's analysis in Cannon of § 601 ... is completely absent
from § 602. Whereas § 601 decrees that '[n]o person ... shall ... be subjected to
discrimination,' ... the text of§ 602 provides that '[e]ach Federal department and agency
... is authorized and directed to effectuate the provisions of[§ 601]"' (alterations in
original)); Gonzaga Univ. v. Doe, 536 U.S. 273, 287 (2002)("the provisions entirely lack
the sort of 'rights-creating' language critical to showing the requisite congressional intent
to create new rights .... Unlike the individually focused terminology of Titles VI and IX
('No person ... shall ... be subjected to discrimination'), [the statute's] provisions speak
only to the Secretary of Education, directing that '[n]o funds shall be made available' to
any 'educational agency or institution' which has a prohibited 'policy or practice"').
Unlike the statutes at issue in the cases cited by the Defendant Pharmacies, the
Generic Drug Pricing Law contains rights-creating language. The legislature has
mandated that purchasers of generic prescription drugs are entitled to receive certain
specific money from pharmacies. By creating this property right, it is implicit in the
language of the statute itself that there be a civil action to secure that right. To give effect
to the legislature's intent, a right of action must be inferred.
c. The Defendant Pharmacies' Argument that a Right of Action Would Interfere with the Statutory Scheme for Regulating the Pharmacy Industry Should Be Rejected.
The final factor is "whether implying a remedy would be consistent with the
underlying purposes of the legislative enactment." Flour Exchange Bldg. Corp. v. State
of Minn., 524 N.W.2d 496, 499 (Minn. Ct. App. 1994). The Defendant Pharmacies do
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not dispute that the purpose of the Generic Drug Pricing Law is to ensure that the money
that pharmacies save by dispensing generic prescription drugs in lieu of their brand-name
equivalents is passed to purchasers, not retained by pharmacies. Nor do they dispute that
allowing purchasers to sue pharmacies to recover the money that the purchasers
unlawfully withheld from them is consistent with this purpose. Instead, they argue that
permitting a right of action would interfere with the statutory scheme for regulating the
pharmacy industry. They are wrong.
First, the Defendant Pharmacies observe that the Board of Pharmacy is authorized
to formulate standards governing the pharmacy occupation and is authorized to discipline
pharmacists. But they do not explain how permitting purchasers to sue to recover their
property would interfere with formulating standards governing the pharmacy occupation
or disciplining pharmacists. It would not.
Second, the Defendant Pharmacies suggest that if purchasers were allowed to sue,
it would make the court, and not the Board of Pharmacy, the "primary decision-makers"
about the requirements of Minn. Stat. § 151.21, subd. 4. But the legislature has already
established what the requirements of the statute are. The Board of Pharmacy cannot
change them.7 Moreover, the court does not decide what the statute's requirements are. It
applies them, here in a legal dispute adjudicating property rights.
7 Not only can the Board of Pharmacy not change the requirements of Minn. Stat. § 151.21, sub d. 4, but the Board of Pharmacy has not issued a single regulation relating to the requirements in Minn. Stat. § 151.21, sub d. 4, during the nearly four decades the statute has been on the books.
14
Finally, the Defendant Pharmacies complain that if the Purchasers have the right
to sue to recover their property, and if the Board of Pharmacy also may fine them, then
they may be subject to financial double liability. That is like a thief complaining that he
faces double liability if required to pay back the victim (in a civil action for conversion)
plus a fine to the state (in a criminal prosecution). Where the Defendant Pharmacies have
systematically overcharged the Purchasers, this concern should engender no sympathy.
More importantly, there is no legal significance to the Defendant Pharmacies' concern, as
defendants are frequently required to pay fines to the government as well as damages to
victims.
The Defendant Pharmacies desperately seek to keep their unlawful overcharges.
But the legislature's intent is clear: "Any difference between acquisition cost to the
pharmacist of the drug dispensed and the brand name drug prescribed shall be passed on
to the purchaser." Minn. Stat. § 151.21, subd. 4 (emphasis added). To give effect to the
legislature's intent, a right of action under the Generic Drug Pricing Law must be
implied.8
III. CONCLUSION
The Court of Appeals' decision should be affirmed as to Plaintiffs' Consumer
Fraud Act claim and reversed with respect to Plaintiffs' claims for a direct action under
8 When implying a right of action under a statute, the court may either treat the statutory claim as its own cause of action or allow the cause of action to proceed under the closest common law theory (in this case, unjust enrichment). See Restatement (Second) of Tort§ 874A.
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Minn. Stat. § 151.21, subd. 4, and for unjust emichment. The case should be remanded
to the District Court for further proceedings consistent with such a ruling.
Date: November 12, 2013 Respectfully submitted,
FELHABER, LARSON, FENLON & VOGT, P.A.
~~ ____-y
/~ By: ~ ":aShmall (#1~
220 South Sixth Street, Suite 2200 Minneapolis, MN 55402 (612) 339-6321 [email protected]
and
VARNUMLLP
Perrin Rynders (admitted pro hac vice) Bryan R. Walters Bridgewater Place, P.O. Box 352 Grand Rapids, MI 49501-0352 (616) 336-6000 [email protected] [email protected]
and
BAILEY & GLASSER LLP
John W. Barrett 209 Capitol Street Charleston, WV 25301 (304) 345-6555 [email protected]
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CERTIFICATE OF COMPLIANCE
I hereby certify that this brief conforms to the requirement of Minn. R. Civ. App.
P. 132.01, subds. 1 and 3, for a brief produced with a proportional font. The length of the
brief is 4,538 words. This brief was prepared using Microsoft Word 2010 software.
6605147 l.DOCX
Respectfully submitted,
FELHABER, LARSON, FENLON & VOGT, P.A.
. Has all (#138162) 220 South Sixth Street, Suite 2200 Minneapolis, MN 5 5402 (612) 339-6321 dhashmall@felhaber .com
17