Stafford v. Rite Aid Corp.

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BRYON STAFFORD, individually and on behalf of all others similarly situated, Plaintiff, v. RITE AID CORPORATION and RITE AID HDQTRS. CORP., Defendants.

Nos. 17-CV-1340 TWR (JLB), 18-CV-152 TWR (JLB)

United States District Court, S.D. California

April 10, 2023

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS

(ECF NO. 266)

Todd W. Robinson, United States District Judge

Presently before the Court is the Motion for Partial Judgment on the Pleadings (“Mot.,” ECF No. 266) filed by Defendants Rite Aid Corporation and Rite Aid Hdqtrs. Corp (together, “Rite Aid”), as well as Plaintiffs Bryon Stafford and Robert Josten's Response in Opposition to (“Opp'n,” ECF No. 277) and Defendants' Reply in Support of (“Reply,” ECF No. 282) the Motion. The Court held a hearing on March 23, 2023. (See ECF No. 284.) Having carefully considered the pleadings, the Parties' arguments, and the relevant law the Court GRANTS IN PART AND DENIES IN PART Defendants' Motion, as follows.

BACKGROUND

Plaintiff Bryon Stafford initiated this putative class action on June 30, 2017, alleging causes of action against Rite Aid Corporation for violations of the California Unfair Competition Law (“UCL”), violations of the California Consumer Legal Remedies Act (“CLRA”), unjust enrichment, and negligent misrepresentation. (See generally ECF No. 1.) Specifically, Plaintiff alleged that, “[a]t bottom, this action concerns Rite Aid's illegal practice of overcharging customers enrolled in public or private health care plans for generic prescription drugs by submitting to third-party payors claims for payment at prices that Rite Aid has knowingly and intentionally inflated above its ‘usual and customary' prices.” (See id. ¶ 8.)

Plaintiff Stafford amended his Complaint on July 28, 2017, (see generally ECF No. 18), and Rite Aid Corporation moved to dismiss. (See generally ECF No. 19.) On December 19, 2017, the Honorable Anthony J. Battaglia granted Rite Aid Corporation's motion to dismiss, dismissing without prejudice Plaintiff Stafford's claims as time-barred. (See generally ECF No. 29.)

Plaintiff Stafford filed a further amended complaint on January 9, 2018, adding allegations to support equitable tolling of the statute of limitations. (See generally ECF No. 30.) Defendant Rite Aid Corporation again moved to dismiss on January 23, 2018, arguing, among other things, that Plaintiff Stafford's UCL claim must fail because “there is an adequate remedy at law.” (See generally ECF No. 32.)

Plaintiff Robert Josten also filed his own putative class action on January 23, 2018, alleging similar causes of action for negligent misrepresentation, unjust enrichment, violation of the unfair and unlawful prongs of the UCL, violation of the CLRA, and declaratory and injunctive relief. (See generally No. 18-CV-152, ECF No. 1.) Rite Aid Corporation moved to dismiss the Josten action on March 16, 2018. (See generally No. 18-CV-152, ECF No. 15.)

On September 28, 2018, Judge Battaglia denied Rite Aid Corporation's motion to dismiss the Stafford action, concluding that Plaintiff Stafford had adequately alleged his causes of action. (See generally ECF No. 41.) As is relevant to the instant Motion, Judge Battaglia rejected Rite Aid Corporation's argument that “Stafford's UCL claims should be dismissed because the remedies at law are unsupported under the UCL” because that “argument . . . assume[d] Stafford's claims are grounded only in contract law-a contention the Court reject[ed].” (See id. at 14 n.1.) Judge Battaglia also found “Stafford's representation that he is seeking restitution adequate and not grounds for dismissal of his UCL claims.” (See id. at 15.) Rite Aid Corporation subsequently answered Stafford's Second Amended Complaint, (see generally ECF No. 42), and the case proceeded to discovery. (See generally Docket.) Rite Aid Corporation then moved to compel arbitration on June 17, 2019. (See generally ECF No. 78.)

Meanwhile, Judge Battaglia granted Rite Aid Corporation's motion to dismiss the Josten action for failure adequately to plead tolling of the statute of limitations on November 20, 2018. (See generally No. 18-CV-152, ECF No. 25.) Plaintiff Josten filed an amended complaint on December 11, 2018, (see generally No. 18-CV-152, ECF No. 27), which Rite Aid Corporation moved to dismiss on December 21, 2018. (See generally No. 18-CV-152, ECF No. 28.) Judge Battaglia denied the motion on August 7, 2019, concluding that Plaintiff Josten had “appropriately allege[d] tolling” and that “Josten's claims do not arise under The Medicare Act and are thus not subject to its exhaustion requirements.” (See generally No. 18-CV-152, ECF No. 38.)

At the Parties' request, (see ECF No. 100; No. 18-CV-152, ECF No. 57), the Stafford and Josten actions were consolidated on October 24, 2019. (See ECF No. 101; No. 18-CV-152, ECF No. 58.) Rite Aid filed a motion to compel arbitration as to Plaintiff Josten on December 30, 2019. (See generally ECF No. 114.) Judge Battaglia denied the motion to compel arbitration as to Plaintiff Stafford on February 25, 2020, (see ECF No. 134), and granted the Parties' joint motion to add Rite Aid Hdqtrs. Corp. as a Defendant on March 4, 2020. (See ECF No. 138.) Plaintiffs filed their respective operative complaints on March 6, 2020. (See ECF Nos. 145 (“Stafford's TAC”), 146 (“Josten's SAC”) (together, the “Operative Complaints”).)

On March 24, 2020, Defendant Rite Aid Corporation appealed Judge Battaglia's denial of its motion to compel arbitration as to Plaintiff Stafford. (See ECF No. 148.) The Parties then proceeded to discovery, (see, e.g., ECF No. 152), and Defendant Rite Aid Hdqtrs. Corp. moved to compel arbitration as to Plaintiff Stafford, (see ECF No. 163), and Plaintiff Josten. (See ECF No. 166.) On June 10, 2020, Defendants moved ex parte to stay the consolidated actions in light of their then-pending appeal of the arbitration issue, (see ECF No. 183), and Judge Battaglia granted that request on July 30, 2020. (See ECF No. 196.)

These consolidated actions were then transferred to the undersigned on October 6, 2020, (see ECF No. 201), at which time the Court denied without prejudice the pending motion to compel arbitration as to Plaintiff Josten. (See ECF No. 202.) On May 21, 2021, the Ninth Circuit affirmed Judge Battaglia's denial of Defendant Rite Aid Corporation's motion to compel arbitration as to Plaintiff Stafford. See Stafford v. Rite Aid Corp., 998 F.3d 862 (9th Cir. 2021). The Court therefore lifted the stay on July 20, 2021. (See ECF No. 209.)

On August 3, 2021, however, the Parties jointly moved to stay these proceedings pending mediation. (See ECF No. 211.) These consolidated actions remained stayed pending mediation for over a year until the Court lifted the stay on September 1, 2022, (see ECF No. 227), following an “impasse” in the Parties' settlement negotiations. (See ECF No. 226.)

On September 15, 2022, Rite Aid moved to stay these consolidated actions pending resolution of the Ninth Circuit's appeal in Washington v. CVS Pharmacy, Inc., No. 2116162 (9th Cir. filed July 12, 2021). (See generally ECF No. 230.) The Court denied the motion on November 3, 2022, and directed the Parties to contact Magistrate Judge Allison H. Goddard's chambers to obtain an updated scheduling order. (See generally ECF No. 239.) Judge Goddard issued a Scheduling Order on November 15, 2022, requiring that any motion for judgment on the pleadings be filed by January 9, 2023. (See ECF No. 242.) This Motion followed on that deadline. (See generally ECF No. 266.)

LEGAL STANDARD

A party may file a motion for judgment on the pleadings after that party files an answer. Fed.R.Civ.P. 12(c). A motion for judgment on the pleadings pursuant to Rule 12(c) is functionally identical to a Rule 12(b)(6) motion and “the same standard of review applies to motions brought under either rule.” Gregg v. Haw. Dep't of Pub Safety, 870 F.3d 883, 887 (9th Cir. 2017) (quotation omitted). The court must accept all factual allegations as true, draw reasonable inferences in favor of the non-moving party, and decide whether the allegations “plausibly suggest an entitlement to relief.” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 681 (2009)). Under this standard, “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 557 (2007)). While a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Id. A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

“If a complaint is dismissed for failure to state a claim, leave to amend should be granted ‘unless the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.'” DeSoto v. Yellow Freight Sys Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)); see also Cafasso, 637 F.3d at 1058 (“Normally, when a viable case may be pled [under Rule 12(c)], a district court should freely grant leave to amend.” (citing Lipton v. Pathogenesis Corp., 284 F.3d 1027, 1039 (9th Cir. 2002))). “A district court does not err in denying leave to amend where the amendment would be futile.” Id. (citing Reddy v. Litton Indus., 912 F.2d 291, 296 (9th Cir. 1990), cert. denied, 502...