Walmart Inc. v. U.S. Dep't of Justice, CIVIL NO. 4:20-CV-817-SDJ

CourtUnited States District Courts. 5th Circuit. United States District Court of Eastern District Texas
Decision Date04 February 2021
Docket NumberCIVIL NO. 4:20-CV-817-SDJ


CIVIL NO. 4:20-CV-817-SDJ


February 4, 2021


Walmart Inc. has filed suit against the United States Department of Justice (DOJ), the United States Drug Enforcement Administration (DEA), Acting Attorney General Monty Wilkinson, and DEA Acting Administrator D. Christopher Evans1 to resolve a dispute concerning the obligations of pharmacists and pharmacies under the Controlled Substances Act.2 Asserting a single cause of action under the Declaratory Judgment Act, Walmart seeks judicial declarations broadly addressing DOJ's litigation positions interpreting the Controlled Substances Act and its implementing regulations in relation to an enforcement action threatened by DOJ against Walmart.

Before the Court is DOJ's Rule 12(b)(1) motion to dismiss Walmart's suit for lack of subject-matter jurisdiction. DOJ contends that the Court lacks subject-matter jurisdiction because Walmart's complaint fails to present a justiciable "case or

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controversy" under Article III, § 2 of the United States Constitution and because Congress has not waived sovereign immunity for this suit against the United States. Because the Court concludes that sovereign immunity bars Walmart's suit, DOJ's motion is granted and this case is dismissed for want of subject-matter jurisdiction.


In recent years, the United States has confronted a growing opioid epidemic, which has presented one of the worst drug crises in our history as well as a national health emergency.3 Although the crisis began in the 1990s, it has continued unabated, and has even accelerated, over the last twenty-five years.4 The Centers for Disease Control and Prevention (CDC) has reported that, from 2000 to 2014, drug-overdose deaths in the United States increased by 137 percent, including a 200 percent rise in overdose deaths involving the abuse of pain-relieving prescription drugs and heroin.5 Data collected by the National Institute on Drug Abuse shows that

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nearly eighty percent of people who began abusing illicit opioids during the 2000s began by abusing a prescription opioid.6 The yearly cost to human life resulting from the opioid epidemic is exemplified by CDC data revealing that, in 2017, the United States experienced more than 70,237 overdose deaths, of which 47,600 (nearly seventy percent) involved an opioid—an average of 130 opioid overdose deaths each day.

At the same time, doctors can and do prescribe opioids to treat patients with acute and chronic pain, patients who have recently undergone surgery or experienced injuries, and patients suffering from medical conditions such as cancer and inflammatory, neurological, and musculoskeletal conditions.7 Because of their beneficial uses, opioid medications have long been approved by the Food and Drug Administration and have benefited millions of Americans. The challenge for regulatory authorities has thus been to ensure that legitimately made opioids intended for lawful purposes are not subject to "diversion": that is, the sale or exchange of opioids as illicit substances in the illegitimate drug market.8

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Congress enacted the Controlled Substances Act (CSA), Pub. L. No. 91-513, tit. II, 84 Stat. 1236, 1242-84 (1970) (codified as amended at 21 U.S.C. §§ 801-904), in 1970 to, among other things, "provide meaningful regulation over legitimate sources of drugs to prevent diversion into illegal channels." Gonzales v. Raich, 545 U.S. 1, 10, 125 S.Ct. 2195, 162 L.Ed.2d 1 (2005). Through the CSA, Congress implemented "a closed regulatory system making it unlawful to manufacture, distribute, dispense, or possess any controlled substance except in a manner authorized by the CSA." Id. at 13 (citing 21 U.S.C. §§ 841(a)(1), 844(a)).

Under the CSA, controlled substances are categorized into five schedules based on their potential for abuse or dependence, their accepted medical use, and their accepted safety for use under medical supervision. See 21 U.S.C. § 812. For example, Schedule II controlled substances have a currently accepted medical use in the United States, or a currently accepted medical use with severe restrictions, but these drugs also have a high potential for abuse, which may lead to severe psychological or physical dependence. See 21 U.S.C. § 812(b)(2). Schedule II drugs are "the most powerful and dangerous drugs that can be lawfully prescribed" and include "many pharmaceutical opioids" such as hydrocodone, morphine, oxycodone, and methadone. United States v. Ruan, 966 F.3d 1101, 1122 (11th Cir. 2020).

To prevent the diversion of controlled substances, the CSA imposes requirements for the distributing and dispensing of such substances. The CSA also grants the Attorney General broad authority to prevent, detect, and investigate the

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diversion of controlled substances. See, e.g., 21 U.S.C. §§ 821-24, 827, 880. In turn, the Attorney General has delegated that authority to the DEA Administrator. See 28 C.F.R. § 0.100(b). Under that authority, DEA regulates every link in the controlled-substance supply chain. Any person who manufactures, distributes, or dispenses (including by prescribing, see 21 U.S.C. § 802(10)) a controlled substance must register, and maintain that registration, with DEA, see 21 U.S.C. § 822, and registrants are subject to numerous regulatory requirements and oversight provisions. All pharmacies, for example, wishing to distribute or dispense controlled substances must register with DEA. 21 U.S.C. § 822(a). Once registered, a pharmacy, its agents, and its employees may distribute or dispense controlled substances only to the extent authorized by their registration and in conformity with the CSA. See 21 U.S.C. § 822(b).

Except under certain limited circumstances, controlled substances that constitute prescription drugs under the Federal Food, Drug, and Cosmetic Act may not be dispensed without an accompanying prescription. See 21 U.S.C. § 829. To be valid under the CSA, any such prescription "must be issued for a legitimate medical purpose by an individual practitioner acting in the usual course of his professional practice." 21 C.F.R. § 1306.04(a). In this regard, although Section 1306.04(a) imposes a responsibility on medical practitioners to issue valid prescriptions, it also imposes a "corresponding responsibility" on the pharmacist. The regulation provides that any order "purporting to be a prescription issued not in the usual course of professional treatment or in legitimate and authorized research is not a prescription" under the

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CSA, and "the person knowingly filling such a purported prescription, as well as the person issuing it, shall be subject to the penalties provided for violations of the provisions of law relating to controlled substances." 21 C.F.R. § 1306.04(a) (citing 21 U.S.C. § 829). Similarly, a pharmacist's conduct must adhere to the usual course of his or her professional practice. 21 C.F.R. § 1306.06.

A registrant who dispenses a drug without a valid prescription may be subject to civil penalties or, under certain circumstances, criminal penalties. See 21 U.S.C. § 842(a)(1), (c). The CSA also authorizes the Attorney General to seek declaratory and injunctive relief for such violations of law. 21 U.S.C. § 843(f).

The CSA also regulates distributors of controlled substances. A "distributor" is defined as a person or entity that delivers (other than by administering or dispensing) a controlled substance. 21 U.S.C. § 802(11). Distributors are required to register with DEA and, among other requirements, to maintain effective controls against the diversion of controlled substances for illegitimate uses. 21 U.S.C. § 823(b)(1). Distributors are also required by regulation to "design and operate a system to disclose to the registrant suspicious orders of controlled substances" and to notify DEA of such "suspicious orders" when discovered by the registrant. 21 C.F.R. § 1301.74(b). The regulation defines "suspicious orders" to include "orders of unusual size, orders deviating substantially from a normal pattern, and orders of unusual frequency." Id.

DOJ has taken the position that any failure by a distributor to detect and report a suspicious order is a violation of law under 21 U.S.C. § 842(a)(5), which states

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that it is unlawful for any person "to refuse or negligently fail to make, keep, or furnish any record, report, notification, . . . or information required under this subchapter . . . ." The CSA provides that a person who violates 21 U.S.C. § 842(a)(5) is subject to a civil penalty not to exceed $10,000 for each violation on or before November 2, 2015, and not to exceed $15,691 for each violation after November 2, 2015. See 21 U.S.C. § 842(c)(1)(A), (B); 28 C.F.R. § 85.5.


Walmart, a retail giant and the largest public company in the world, operates approximately 5,000 stores in the United States. Wal-Mart Stores, Inc. v. Tex. Alcoholic Beverage Comm'n, 945 F.3d 206, 212 (5th Cir. 2019). Although Walmart is not principally a pharmacy, it provides pharmacy services to its customers, including dispensing controlled substances such as opioids. For a period of time, Walmart also acted as a distributor of controlled substances, including opioids, by buying opioids directly from manufacturers and shipping them to its own pharmacies.

As a result of disagreements with DOJ concerning the proper interpretation of the CSA and its implementing regulations, Walmart has filed with this Court a Complaint for Declaratory Relief asserting a single cause of action under the Declaratory Judgment Act (DJA), 28 U.S.C. § 2201. Walmart requests that the Court enter nine judicial declarations concerning the obligations of pharmacies and pharmacists under the CSA and its regulations. According to Walmart, the declarations are necessary because "DOJ and DEA are placing pharmacists and pharmacies in an untenable...

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