United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
E. JACKSON UNITED STATES DISTRICT JUDGE
matter is before the Court on defendant's motion for
partial dismissal of the first amended complaint pursuant to
Fed.R.Civ.P. 12(b)(6). Plaintiff has filed a response in
opposition, and the issues are fully briefed.
Cystic Fibrosis Pharmacy, Inc., provides traditional pharmacy
and compounding services. Defendant Express Scripts, Inc.,
(“ESI”) is a pharmacy benefits manager that
processes and pays insurance claims for prescription drugs.
Patients in plans managed by defendant receive prescription
drugs from participating pharmacies, such as plaintiff, or
directly from defendant through the mail-order pharmacy it
owns and operates. [See Doc. # 44 at ¶¶15,
2014, plaintiff joined defendant's network of pharmacies.
[Doc. # 44 at ¶21]. In April 2016, defendant notified
plaintiff that it would be subjected to an audit on May 19,
2016. On June 10, 2016, defendant notified plaintiff that it
was terminating the provider agreement pursuant to the
agreement's “immediate termination”
provision, § 4.2.c. [Doc. # 44 at
¶¶24-25]. As grounds for the termination, defendant
stated that it had determined that plaintiff was primarily
operating a mail order business, rather than a retail
pharmacy as required by the provider agreement. Defendant
also determined that plaintiff was regularly mailing drugs to
patients in states “without appropriate
licensure.” [Doc. # 44-2]. Although defendant's
notice to plaintiff stated that the termination was effective
“on or about July 18, 2016, ” defendant notified
patients that plaintiff would be out of network on July 8,
2016. [Doc. # 44 at ¶33].
alleges that its termination is not justified under the
provider agreement. Plaintiff also alleges that defendant did
not comply with provisions requiring notice 90 days before
termination and a 30-day period for dispute resolution. [Doc.
# 44 at ¶¶29-31, 44, 52]. In the first amended
complaint, plaintiff asserts the following claims: breach of
contract arising from the termination of the provider
agreement (Count I); breach of implied duty of good faith and
fair dealing (Count II); unjust enrichment (Count III);
tortious interference with plaintiff's patient base
(Count IV); declaratory judgment (Count V); injunctive relief
(Count VI); breach of contract arising from failure to pay
monies due and owing (Count VII); and tortious interference
with patient choice (Count VIII).
moves to dismiss Counts II through VI and VIII.
purpose of a motion to dismiss under Rule 12(b)(6) is to test
the legal sufficiency of the complaint. Fed.R.Civ.P.
12(b)(6). The factual allegations of a complaint are assumed
true and construed in favor of the plaintiff, “even if
it strikes a savvy judge that actual proof of those facts is
improbable.” Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 556 (2007) (citing Swierkiewicz v. Sorema
N.A., 534 U.S. 506, 508 n.1 (2002)); Neitzke v.
Williams, 490 U.S. 319, 327 (1989) (“Rule 12(b)(6)
does not countenance . . . dismissals based on a judge's
disbelief of a complaint's factual allegations.”);
Scheuer v. Rhodes, 416 U.S. 232, 236 (1974) (stating
that a well-pleaded complaint may proceed even if it appears
“that a recovery is very remote and unlikely”).
The issue is not whether the plaintiff will ultimately
prevail, but whether the plaintiff is entitled to present
evidence in support of his claim. Scheuer, 416 U.S.
at 236. A viable complaint must include “enough facts
to state a claim to relief that is plausible on its
face.” Twombly, 550 U.S. at 570; see
id. at 563 (stating that the “no set of
facts” language in Conley v. Gibson, 355 U.S.
41, 45-46 (1957), “has earned its retirement”);
see also Ashcroft v. Iqbal, 556 U.S. 662,
678-84 (2009) (holding that the pleading standard set forth
in Twombly applies to all civil actions).
“Factual allegations must be enough to raise a right to
relief above the speculative level.” Twombly,
550 U.S. at 555.
Count II - Breach of implied covenant of good faith
and fair dealing
Missouri, all contracts have an implied covenant of good
faith and fair dealing.” Lucero v. Curators of
Univ. of Missouri, 400 S.W.3d 1, 9 (Mo.Ct.App. 2013)
(citation omitted). This good faith requirement extends to
the manner in which a party employs discretion conferred by a
contract. BJC Health Sys. v. Columbia Cas. Co., 478
F.3d 908, 914 (8th Cir. 2007) (citing Mo. Consol. Health
Care Plan v. Cmty. Health Plan, 81 S.W.3d 34, 45
(Mo.Ct.App. 2002)). “When a decision is left to the
discretion of one party, the question is not whether the
party made an erroneous decision but whether the decision was
made in bad faith or was arbitrary or capricious so as to
amount to an abuse of discretion.” Cordry v.
Vanderbilt Mortg. & Fin., Inc., 445 F.3d 1106, 1112
(8th Cir. 2006) (citation omitted). Evidence suggesting that
a party's discretionary decision was a mere pretext for
terminating the contract will support a finding of bad faith.
See Citimortgage, Inc. v. OCM Bancorp, Inc, No.
4:10CV467 CDP, 2011 WL 1594950, at *4 (E.D. Mo. Apr. 27,
2011) (citing BJC, 478 F.3d at 915-16).
Missouri law, the “implied covenant will not . . . be
imposed where the parties expressly address the matter at
issue in their contract.” State v. Nationwide Life
Ins. Co., 340 S.W.3d 161, 194 (Mo.Ct.App. 2011)
(“There is no authority for the proposition that a
party has an implied duty of good faith and fair dealing to
agree to renew a contract that is set to expire by its
negotiated terms.”). Defendant argues that
plaintiff's claim for breach of the implied covenant of
good faith and fair dealing must be dismissed because §
4.2 of the provider agreement expressly governs termination.
Plaintiff's claim is based on its contention that
termination was not justified under the contract and was
undertaken in order to divert plaintiff's patients to
other pharmacies. See Doc. #44 at ¶¶16, 18
(defendant has become the nation's largest PBM as a
result of engaging in “anticompetitive and other
unlawful behavior.”); ¶19 (defendant “takes
affirmative steps to direct the flow of prescriptions to its
own [mail order] pharmacy to increase market share, slow down
the costs, and eliminate competition.”); ¶51, 62
(defendant did not have cause to terminate its provider
agreement and will divert plaintiff's patients to its own
pharmacy or another pharmacy that is more economically
advantageous to it); ¶¶33, 44 (defendant failed to
comply with contractual requirements regarding notice and an
opportunity to cure and prematurely notified plaintiff's
patients that it was no longer a covered provider). Accepting
these allegations as true and drawing all inferences in favor
of plaintiff, plaintiff has sufficiently alleged that
defendant's termination decision was made in bad faith.
See Citimortgage, Inc. v. Platinum Home Mortg.
Corp., No. 4:15CV1242 JCH, 2016 WL 147110, at *4 (E.D.
Mo. Jan. 13, 2016) (finding defendant adequately stated
counterclaim for breach of implied covenants by alleging that
plaintiffs acted on nonexistent defects and failed to afford
contractually-mandated period and opportunity to cure).
Plaintiff has adequately stated a claim for breach of the
implied covenant of good faith and fair dealing and
defendant's motion to dismiss will be denied with respect
to Count II.
Count III - ...