Cnty. Bd. of Arlington Cnty. v. Express Scripts Pharmacy, Inc.
| Decision Date | 03 May 2021 |
| Docket Number | No. 20-1031,20-1031 |
| Citation | 996 F.3d 243 |
| Parties | The COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA, Plaintiff - Appellee, v. EXPRESS SCRIPTS PHARMACY, INC.; ESI Mail Pharmacy Service, Inc., Defendants - Appellants, and Mallinckrodt PLC; Mallinckrodt LLC; SpecGx LLC; Endo Health Solutions Inc. ; Endo Pharmaceuticals Inc.; Par Pharmaceutical Companies, Inc.; Par Pharmaceutical, Inc.; Teva Pharmaceuticals USA, Inc.; Cephalon, Inc.; Barr Laboratories, Inc.; Watson Laboratories, Inc.; Actavis Pharma, Inc.; Actavis, LLC ; Allergan PLC; Allergan Finance, LLC ; Mylan Pharmaceuticals, Inc.; Mylan Institutional Inc.; Indivior Inc.; McKesson Corporation; McKesson Medical-Surgical Inc.; Cardinal Health, Inc.; AmerisourceBergen Drug Corporation; General Injectables & Vaccines, Inc.; Insource, Inc.; CVS Health Corporation; CVS Pharmacy, Inc.; CVS TN Distribution, L.L.C. ; Walgreens Boots Alliance, Inc. ; Walgreen Co.; Walgreen Eastern Co., Inc.; Express Scripts Holding Company; Express Scripts, Inc.; Caremark Rx, L.L.C.; CaremarkPCS Health, L.L.C.; Caremark, L.L.C.; CaremarkPCS, L.L.C.; Unitedhealth Group Incorporated; Optum, Inc.; OptumRx, Inc.; Walmart, Inc.; Rite Aid Corp.; Rite Aid of Virginia, Inc.; Rite Aid Mid-Atlantic ; Rite Aid of Maryland, Inc.; Eckerd Corporation; Does 1 -100 ; Henry Schein, Inc., Defendants. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Adriana Riviere-Badell, KOBRE & KIM LLP, Miami, Florida, for Appellants. R. Johan Conrod, Jr., SANFORD HEISLER SHARP, LLP, Nashville, Tennessee, for Appellee. ON BRIEF: Matthew I. Menchel, Miami, Florida, Julian W. Park, KOBRE & KIM LLP, San Francisco, California, for Appellants. Grant Morris, Kevin Sharp, Andrew Miller, SANFORD HEISLER SHARP, LLP, Nashville, Tennessee; Joanne Cicala, THE CICALA LAW FIRM PLLC, Dripping Springs, Texas; W. Edgar Spivey, KAUFMAN & CANOLES, P.C., Norfolk, Virginia, for Appellee.
Before WILKINSON, NIEMEYER, and QUATTLEBAUM, Circuit Judges.
Reversed and remanded by published opinion. Judge Quattlebaum wrote the opinion, in which Judge Wilkinson and Judge Niemeyer joined.
This appeal involves the application of 28 U.S.C. § 1442(a)(1) —commonly referred to as the "federal officer removal statute"—to private actors. Under the statute, private actors can remove a case to federal court when they show that they: (1) acted under the direction of a federal officer; (2) possess a colorable federal defense; and (3) engaged in government-directed conduct that was causally related to the plaintiff's claims. See Sawyer v. Foster Wheeler LLC , 860 F.3d 249, 254 (4th Cir. 2017).1
Here, the County Board of Arlington County, Virginia ("Arlington") sued a host of opioid manufacturers, distributers and pharmacies, including Express Scripts Pharmacy, Inc. and ESI Mail Pharmacy Service, Inc. (collectively the "ESI Defendants"), in state court for causing, or contributing to, the opioid epidemic in Arlington County, Virginia. The ESI Defendants removed the case to federal court pursuant to the federal officer removal statute. They claimed their operation of the TRICARE Mail Order Pharmacy ("TMOP") as a subcontractor to a contract between their corporate affiliate, Express Scripts, Inc.,2 and the Department of Defense ("DOD") satisfied each of the statute's requirements. Arlington moved to remand the case to state court, contending that the ESI Defendants cannot satisfy the requirements of the federal officer removal statute. The district court granted the motion, emphasizing that the ESI Defendants operated the TMOP as subcontractors of Express Scripts, Inc. and that their interactions with DOD were "too attenuated, infrequent, and peripheral to satisfy the ‘acting under’ requirement." J.A. 823.
We disagree. The ESI Defendants met their burden of showing that they were "acting under" DOD in operating the TMOP in accordance with the DOD contract. Furthermore, while the district court did not address the other two requirements of the federal officer removal statute—possession of a colorable federal defense and a causal relationship between the government-directed conduct and the plaintiffs’ claims—we find that judicial economy favors resolution of those questions without a time-consuming and costly remand. On the merits, we hold that the ESI Defendants satisfy those two requirements. Accordingly, we reverse the district court's ruling, hold that removal was proper and remand for further proceedings.
Arlington sued a large number of manufacturers, distributors and pharmacies that dispense opioid medications in state court seeking to recover financial costs incurred as a result of widespread opioid use. This case is not unusual, as over 2,000 cases filed by governmental entities have been consolidated into a federal multidistrict litigation case in the Northern District of Ohio (the "Opiate MDL"). See In re Nat'l Prescription Opiate Litig. , 290 F. Supp. 3d 1375, 1378 (J.P.M.L. 2017).
Later, Arlington amended its Complaint, adding the ESI Defendants. Arlington alleges that the defendants, including the ESI Defendants, "have caused an opioid epidemic that has resulted in economic, social and emotional damage to virtually every community in the United States and tens of thousands of Americans." J.A. 53. According to Arlington, "Arlington County has been hit hard by the opioid epidemic," with increasing rates of neonatal abstinence syndrome and Hepatitis C since 2011. J.A. 55. Moreover, the rate of overdose deaths in Arlington County has approximately tripled during the period of 1999 to 2016.
Arlington has asserted claims against three groups of defendants: (1) opioid manufacturers; (2) opioid distributors; and (3) pharmacies that fill opioid prescriptions. The ESI Defendants fall into the third category, as they operate mail order pharmacies that distribute opioid medications to patients both nationally and in Arlington County. To that end, Arlington seeks to impose liability on the ESI Defendants because they were "keenly aware of the oversupply of prescription opioids through the extensive data and information they developed and maintained" but failed to "tak[e] any meaningful action to stem the flow of opioids into the communities ...."3 J.A. 152.
The ESI Defendants removed the case under the federal officer removal statute.4 In support of removal, the ESI Defendants claimed that "Express Scripts holds a contract with [DOD] to provide services to members of the DOD health care program, TRICARE, across the country, including in Arlington County, Virginia." J.A. 22. TRICARE is a federal health insurance program administered by DOD to "provide[ ] medical care to current and retired service members and their families ...." United States ex rel. Lutz v. United States , 853 F.3d 131, 140 n.2 (4th Cir. 2017) (citing 32 C.F.R. § 199.17 ). TRICARE is extensively governed by various federal statutes and regulations. See, e.g. , 10 U.S.C. § 1071 (); 32 C.F.R. § 199.17 (). The ESI Defendants operate the TMOP as subcontractors for their corporate affiliate, Express Scripts, Inc. Therefore, "Express Scripts, Inc. provides pharmacy benefit management services and [the ESI Defendants] administer the TRICARE Mail Order Pharmacy under the detailed requirements of the contract ...." J.A. 22–23. Furthermore, the ESI Defendants contended that Arlington's allegations that they "maintained formularies and dispensed opioids cannot be separated from [their] services provided under the DOD contract." J.A. 24. Finally, the ESI Defendants asserted that they could assert two colorable federal defenses—the government contractor defense and federal preemption.
Arlington promptly moved to remand the case to state court, claiming that the ESI Defendants’ reliance on the federal officer removal statute was improper because they were not parties to the DOD contract and were not registered to contract with the federal government. Therefore, according to Arlington, the ESI Defendants were not "acting under" the direction of a federal officer—i.e., DOD. Furthermore, Arlington argued that there was no causal nexus between its claims against the ESI Defendants and their administration of the TMOP. Emphasizing that point, Arlington claimed that it "has not made any allegations about injuries to veterans." J.A. 250. Finally, Arlington argued that, because "there is no direct contractual relationship or detailed control by a federal officer, the government contractor defense is unavailable" and federal preemption does not apply. J.A. 251–52.5
The district court granted the motion to remand. It noted that neither of the ESI Defendants is "an actual party to the [DOD] contract and neither is registered to contract with the federal government." J.A. 818. Nonetheless, the district court rejected Arlington's argument that the absence of a contractual relationship is a bar to federal officer removal. Instead, the district court looked to "whether there otherwise exists a sufficiently close, direct relationship between the non-government entity and a federal officer or agency." J.A. 818. In that analysis, the district court acknowledged that the ESI Defendants administered TMOP, were required to use DOD's formulary, served as a fiscal intermediary for DOD's purchase of drugs, could not modify the contract without express authorization from DOD and, without the ESI Defendants’ services, DOD "would have to administer the mail order pharmacy program itself." J.A. 820–21. Ultimately, however, the district court emphasized that "there has never been any direct interaction between DOD's representative and the [ESI Defendants]." J.A. 823. Instead, the district court concluded, "[a]t most, there is limited, direct interaction between the DOD and the [ESI Defend...
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