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Brannon v. Express Scripts Holding Co.

United States District Court, D. Kansas

January 2, 2018

TRACI BRANNON, LINDSEY RIZZO, AND JAMIE HERR, individually and on behalf of all others similarly situated, Plaintiffs,
v.
EXPRESS SCRIPTS HOLDING COMPANY, et al., Defendants.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge

         On August 29, 2017, plaintiffs Traci Brannon, Lindsey Rizzo, and Jamie Herr, individually and on behalf of all others similarly situated, filed a Class Action Complaint, against five defendants who own or operate pharmacy benefit management companies. Doc. 1. Plaintiffs are enrolled in employer-provided welfare benefit health plans through one of the defendants. They allege that defendants contracted on behalf of health plans and insurers with Mylan N.V., Mylan Specialty L.P., and/or Mylan Pharmaceuticals, Inc. (collectively, “Mylan”) to purchase EpiPen epinephrine injectors. And, in doing so, plaintiffs assert that defendants engaged in extortion and deceptive conduct, with the purpose of extracting unlawful portions of rebates and other payments from Mylan. Plaintiffs seek to represent a class of individuals who were enrolled in one of defendant's plans, who purchased an EpiPen epinephrine injector under such a plan, and who were required to pay all or a portion of the purchase price based on an inflated list price for the EpiPen.

         Defendants Prime Therapeutics, LLC, Express Scripts Holding Company, and Express Scripts, Inc. (collectively “the Moving Defendants”) have filed a Motion to Transfer Venue. Doc. 38. The Moving Defendants ask the court to transfer this case to the District of Minnesota under the first-to-file rule. Alternatively, the Moving Defendants ask the court to transfer the case under 28 U.S.C. § 1404(a). For reasons explained below, the court grants the Motion to Transfer Venue, and the court transfers this case to the District of Minnesota.[1]

         I. Factual Background

         Plaintiffs have filed a Class Action Complaint against five defendants who own or operate pharmacy benefit management companies (“the PBM defendants”). The five PBM defendants are: (1) Express Scripts Holding Company; (2) Express Scripts, Inc.; (3) UnitedHealth Group, Inc.; (4) OptumRx, Inc.; and (5) Prime Therapeutics, LLC. Plaintiffs are enrolled in employer-provided welfare benefit health plans through one of the defendants. The Employee Retirement Income Security Act of 1974 (“ERISA”) governs these plans.

         Plaintiffs allege that the defendant pharmacy benefit managers contracted on behalf of health plans and insurers with Mylan to purchase EpiPen epinephrine injectors. As part of their contracting, plaintiffs assert that defendants violated ERISA by engaging in extortion and deceptive conduct that unlawfully extracted ever-larger portions of rebates and other payments from Mylan. Based on this theory, plaintiffs seek to recover hundreds of millions of dollars allegedly paid to defendants through the “creation, maintenance, and concealment of a multi-tiered fraudulent scheme designed to deceive consumers through the marketing and sale of the EpiPen epinephrine injector.” Doc. 1 ¶ 1. Plaintiffs seek to represent a proposed class they define as:

The ERISA Class. All individuals residing in the United States and its territories who are or were enrolled in an ERISA-covered health benefit plan or health insurance plan for which one or more of the PBM Defendants administers or manages pharmacy benefits, who purchased an EpiPen epinephrine injector pursuant to such plans or policies and were required to pay all or a portion of the purchase price based on an inflated list price (the “ERISA Class”).
Excluded from the Class are: (a) the named Defendants and any entity in which they have a controlling interest, and their legal representatives, officers, directors, assignees, and successors and (b) any co-conspirators, and their officers, directors, management, employees, subsidiaries, and affiliates.

Id. ¶ 138.

         Plaintiffs' Complaint asserts four causes of action: (1) violating ERISA § 406(b) (29 U.S.C. § 1106(b)) by engaging in prohibited transactions between a plan and a fiduciary; (2) violating ERISA § 404 (29 U.S.C. § 1104) by breaching fiduciary duties of loyalty and prudence; (3) violating ERISA § 702 (29 U.S.C. § 1182) by discriminating against plan participants and beneficiaries who have a medical condition that requires an EpiPen because defendants' alleged use of artificially inflated prices and undisclosed and excessive PBM Kickbacks have required them to pay greater premiums and contributions for their health plan benefits than those participants and beneficiaries who do not require an EpiPen; and (4) violating ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3)) by knowingly participating in ERISA violations.

         Almost three months before plaintiffs filed this action, Elan and Adam Klein and two other plaintiffs (“the Klein plaintiffs”), individually and on behalf of all others similarly situated, filed a similar, but not identical Class Action Complaint in the District of Minnesota. Klein v. Prime Therapeutics, LLC, No. 17-1884-PAM-SER (D. Minn. June 2, 2017), ECF 1. The original Klein Complaint named four defendants who own or operate pharmacy benefit management companies.[2] On September 27, 2017, the Klein plaintiffs filed an Amended Complaint, adding four more defendants.[3] Klein, ECF 107.

         The Klein Complaint asserts that the defendant pharmacy benefit managers violated their fiduciary duties under ERISA by subjecting plan participants and beneficiaries to highly inflated prices for the EpiPen. The Klein plaintiffs contend that defendants negotiated for Mylan to pay increasingly large rebates to defendants and their clients, thus driving up the price of the EpiPen. But instead of passing the rebates on to plan participants in the form of lower or stable prices, defendants allegedly kept the savings from the rebates. This produced, the Klein plaintiffs assert, massive revenue increases for defendants and massive price increases for plan participants.

         The Klein plaintiffs assert four ERISA-based causes of action. They claim defendants: (1) violated ERISA § 404(a)(1)(A) (29 U.S.C. § 1104(a)) by breaching fiduciary duties owed to class members; (2) violated ERISA § 406(b)(2) (29 U.S.C. § 1106(b)(2)) by engaging in prohibited transactions between a plan and a fiduciary; (3) violated ERISA § 405(a) (29 U.S.C. § 1105(a)) by knowingly participating in, and enabling breaches of fiduciary duties; and (4) violated ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3)) for knowingly participating in ERISA violations.

         The Klein plaintiffs seek to represent a proposed ...


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