Beeman v. Anthem Prescription Mgmt., LLC

689 F.3d 1002

12 Cal. Daily Op. Serv. 7826

2012 Daily Journal D.A.R. 9482

Jerry BEEMAN and Pharmacy Services, Inc., doing business as Beemans Pharmacy; Anthony Hutchinson and Rocida Inc., doing business as Finleys Rexall Drug; Charles Miller, doing business as Yucaipai Valley Pharmacy; Jim Morisoli and American Surgical Pharmacy Inc., doing business as American Surgical Pharmacy; Bill Pearson and Pearson and House, on behalf of themselves and all others similarly situated and on behalf of the general public; doing business as Pearson Medical Group Pharmacy, Plaintiffs–Appellees,

v.ANTHEM PRESCRIPTION MANAGEMENT, LLC; Argus Health Systems, Inc.; Benescript Services, Inc.; FFI RX Managed Care; First Health Services Corporation; Managed Pharmacy Benefits, Inc., formerly known as Cardinal Health MPB Inc.; National Medical Health Card Systems, Inc.; Pharmacare Management Services, Inc.; Prime Therapeutics; Restat Corporation; RX Solutions, Inc.; Tmesys, Inc.; WHP Health Initiatives, Inc.; Mede America Corp., Defendants–Appellants.

Jerry Beeman and Pharmacy Services, Inc., doing business as Beemans Pharmacy; Anthony Hutchinson and Rocida Inc., doing business as Finleys Rexall Drug; Charles Miller, doing business as Yucaipai Valley Pharmacy; Jim Morisoli and American Surgical Pharmacy Inc., doing business as American Surgical Pharmacy; Bill Pearson and Pearson and House, on behalf of themselves and all others similarly situated and on behalf of the general public; doing business as Pearson Medical Group Pharmacy, Plaintiffs–Appellees,

v.TDI Managed Care Services, Inc., doing business as Eckerd Health Services; Medco Health Solutions, Inc.; Express Scripts, Inc.; Advance PCS, Advance PCS Health, L.P.; RX Solutions, Inc., Defendants–Appellants.

Nos. 07–56692, 07–56693.

United States Court of Appeals, Ninth Circuit.

Filed June 6, 2012.

Amended July 10, 2012.

D.C. Nos. CV–04–00407–VAP, CV–02–01327–VAP, Central District of California, Riverside.

Before: ALEX KOZINSKI, Chief Judge, HARRY PREGERSON, DIARMUID F. O'SCANNLAIN, SIDNEY R. THOMAS, KIM McLANE WARDLAW, WILLIAM A. FLETCHER, RONALD M. GOULD, MARSHA S. BERZON, JOHNNIE B. RAWLINSON, RICHARD R. CLIFTON and N. RANDY SMITH, Circuit Judges.

ORDER

Appellants' request to modify the counsel listing in the Appendix to the Court's June 6, 2012 Order is GRANTED. The order filed June 6, 2012 is amended by deleting the current Appendix and adding a new Appendix as follows:

APPENDIX

Counsel for Plaintiffs–Appellees

Michael A. Bowse

Browne George Ross LLP

2121 Avenue of the Stars, Suite 2400

Los Angeles, California 90067

Alan M. Mansfield

The Consumer Law Group

10200 Willow Creek Road, Suite 160

San Diego, California 92131

Counsel for Defendant–Appellant Express Scripts, Inc.

Theodore J. Boutrous, Jr.

Gail E. Lees

Christopher Chorba

Gibson, Dunn & Crutcher LLP

333 South Grand Avenue

Los Angeles, CA 90071–3197

Thomas M. Dee

Christopher A. Smith

Husch Blackwell LLP

190 Carondelet Plaza, Suite 600

St. Louis, MO 63105–3441

Counsel for Defendant–Appellant Anthem Prescription Management LLC

Thomas M. Peterson

Molly Moriarty Lane

Morgan Lewis & Bockius LLP

One Market, Spear Street Tower

San Francisco, California 94105

Counsel for Defendant–Appellant Argus Health Systems, Inc.

Shirley M. Hufstedler

Benjamin J. Fox

Morrison & Foerster LLP

555 West Fifth Street, Suite 3500

Los Angeles, CA 90013

Counsel for Defendant–Appellant Benescript

Kent A. Halkett

Musick Peeler & Garrett, LLP

One Wilshire Boulevard, Suite 2000

Los Angeles, CA 90017

Counsel for Defendant–Appellants AdvancePCS; AdvancePCS Health L.P., successor in interest to FFI RX Managed Care, Inc.; PharmaCare Management Services, Inc.; TDI Managed Care Services, Inc. dba Eckerd Health Services

Jason Levin

Steptoe & Johnson LLP

633 West Fifth Street, Suite 700

Los Angeles, CA 90071

Martin D. Schneiderman

Steptoe & Johnson LLP

1330 Connecticut Avenue, N.W.

Washington, DC 20036

Counsel for Medco Health Solutions, Inc.

Richard S. Goldstein

Orrick, Herrington & Sutcliffe LLP

51 West 52nd Street

New York, NY 10019-6142

Counsel for Defendant–Appellant First Health Services Corp.

Thomas Makris

Pillsbury Winthrop Shaw Pittman LLP

2600 Capitol Avenue

Sacramento, CA 95816

Brian D. Martin

Pillsbury Winthrop Shaw Pittman LLP

510 West Broadway, Suite 1100

San Diego, CA 92101

Counsel for Defendant–Appellant Cardinal Health MPB, Inc.

Robert F. Scoular

SNR Denton US LLP

601 South Figueroa Street, Suite 2500

Los Angeles, CA 90017

Rachel Milazzo

Stephen M. O'Brien III

SNR Denton US LLP

211 North Broadway, Suite 3000

St. Louis, MO 63102

Counsel for Defendant–Appellant National Medical Health Card

Nicholas P. Roxborough

Marina N. Vitek

Roxborough, Pomerance, Nye & Adreani LLP

5820 Canoga Avenue, Suite 250

Woodland Hills, CA 91357

Counsel for Defendant–Appellant Prime Therapeutics

J. Kevin Snyder

Vivian I. Kim

Dykema Gossett LLP

333 South Grand Avenue, Suite 2100

Los Angeles, CA 90071

Counsel for Defendant–Appellant Restat, LLC

Sean M. Sherlock

Snell & Wilmer LLP

600 Anton Boulevard, Suite 1400

Costa Mesa, CA 92626

Counsel for Defendant–Appellant RX Solutions, Inc.

Robert Arthur Muhlbach

Kirtland & Packard

2041 Rosecrans Avenue, 4th Floor

El Segundo, CA 90245

Counsel for Defendant–Appellant Tmesys, Inc.

Kurt C. Peterson

Margaret Anne Grignon

Kenneth N. Smersfelt

Brett L. McClure

Reed Smith LLP

355 South Grand Ave., Suite 2900

Los Angeles, CA 90071

Counsel for Defendant–Appellant WHP Health Initiatives

Matthew Oster

McDermott Will & Emery

2049 Century Park East, Suite 3800

Los Angeles, CA 90067

Counsel for Defendant–Appellant Mede America Corporation

Neil R. O'Hanlon

Hogan Lovells US LLP

1999 Avenue of the Stars, Suite 1400

Los Angeles, CA 90067

The Clerk shall file this order with the Supreme Court of California.

ORDER

This appeal requires us to decide whether a California statute, Civil Code section 2527, compels speech in violation of the California Constitution. The statute requires drug claims processors to generate studies about pharmacy pricing, summarize the results and disseminate the information to their clients. The three intermediate California appellate courts and the two state trial courts that have addressed this question have held that the reporting requirement of section 2527 violates article I, section 2 of the California Constitution. See ARP Pharmacy Servs., Inc. v. Gallagher Bassett Servs., Inc., 138 Cal.App.4th 1307, 42 Cal.Rptr.3d 256 (2006); A.A.M. Health Grp., Inc. v. Argus Health Sys., Inc., No. B183468, 2007 WL 602968 (Cal.Ct.App. Feb. 28, 2007); Bradley v. First Health Servs. Corp., No. B185672, 2007 WL 602969 (Cal.Ct.App. Feb. 28, 2007). Ordinarily, the Erie doctrine, Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), would have required our court to “follow the decisions of [the] intermediate state courts,” Stoner v. N.Y. Life Ins. Co., 311 U.S. 464, 467, 61 S.Ct. 336, 85 L.Ed. 284 (1940), but here the panel majority was convinced that the California Supreme Court would decide the question differently. The panel majority concluded that the California Supreme Court would interpret its free speech clause by relying on federal judicial interpretations of the First Amendment to the U.S. Constitution, and conclude that the “statute is constitutional under the First Amendment.” See Beeman v. Anthem Prescription Mgmt., LLC, 652 F.3d 1085, 1095,reh'g en banc granted,661 F.3d 1199 (9th Cir.2011). Where there is no conflict between state courts of appeal, “[d]ecisions of every division of the District Courts of Appeal are binding upon all the justice and municipal courts and upon all the superior courts of this state.” Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450, 455, 20 Cal.Rptr. 321, 369 P.2d 937 (1962). Therefore, were the panel holding to stand without the California Supreme Court deciding the question, plaintiffs would be able to sue in federal court to enforce the state statute, but could not sue in state court to enforce the very same statute.

To resolve the classic pre-Erie problems of forum shopping and inconsistent enforcement of state law, a majority of the active judges of our court voted to rehear this appeal en banc, for the principal purpose of certifying the question to the California Supreme Court. Because the constitutionality of a California legislative enactment under the California Constitution's liberty of speech clause will determine the outcome of this appeal, we respectfully request that the California Supreme Court exercise its discretion to accept and decide the certified question below.

I. Question Certified

Pursuant to Rule 8.548 of the California Rules of Court, we request that the California Supreme Court answer the following question:

Does California Civil Code section 2527 compel speech in violation of article I, section 2 of the California Constitution?

We understand that the Court may reformulate our question, and we agree to accept and follow the Court's decision.

II. Background

The California legislature enacted California Civil Code sections 2527 and 2528 in 1982 at the behest of the California Pharmacists Association. These stand-alone statutory provisions mandate research and reporting requirements for prescription drug claims processors. But unlike disclosure laws, they do not mandate disclosure to the public; rather, section 2527 requires claims processors to privately generate and produce information about third parties to their clients. “A ‘prescription drug claims processor,’ [is] any nongovernmental entity which has a contractual relationship with purchasers of prepaid or insured prescription drug benefits, and which processes, consults, advises on, or otherwise assists in the processing of prepaid or insured prescription drug benefit claims submitted by a licensed California pharmacy or patron thereof.” Cal. Civ.Code § 2527(b). The statute requires prescription drug claims processors to “identif[y] the fees, separate from ingredient costs, of all, or of a statistically significant sample, of California...