United States District Court, E.D. Missouri, Eastern Division
HM COMPOUNDING SERVICES, LLC, and HMX SERVICES, LLC, Plaintiffs,
EXPRESS SCRIPTS, INC., Defendant.
MEMORANDUM AND ORDER
A. ROSS UNITED STATES DISTRICT JUDGE.
matter is before the Court on Defendant Express Scripts, Inc.
(“ESI”)'s Motion for Reconsideration of the
Court's February 3, 2017 Order denying ESI's motion
for partial summary judgment (Doc. No. 345). The motion is
fully briefed and ready for disposition. For the following
reasons, the motion will be denied.
background of this case is set out in detail in the
Court's February 3, 2017 Order. Briefly, ESI terminated
Plaintiffs HM Compounding Services, LLC and HMX Services, LLC
(collectively “HMC”) from its pharmacy provider
network for misrepresenting during a recredentialing process
that it never waived or discounted member copayments. HMC
sought to enjoin the termination by filing an action in the
Supreme Court of the State of New York. ESI removed the case
to the United States District Court for the Eastern District
of New York. The New York District Court subsequently severed
HMC's claims against ESI and transferred the case to this
Court. HMC filed an amended complaint asserting various
statutory and common law claims against ESI, which ESI moved
to dismiss. The Court granted ESI's motion in part. ESI
then moved for partial summary judgment on HMC's
remaining claims based on HMC's alleged breaches of the
parties' Pharmacy Provider Agreement and ESI's
resulting right to terminate that Agreement. The Court denied
partial summary judgment, finding numerous factual disputes
as to whether HMC materially breached its Agreement with ESI.
Federal Rules do not specifically provide for motions for
reconsideration, although they are frequently filed. A motion
for reconsideration is typically construed either as a Rule
59(e) motion to alter or amend a judgment or a Rule 60(b)
motion for relief from a judgment. Auto Services Co. v.
KPMG, L.L.P., 537 F .3d 853, 855 (8th Cir. 2008). Both
Rule 59(e) and Rule 60(b) require that any judgment or order
being reconsidered be a final judgment or order. Fed.R.Civ.P.
59(e), 60(b); Disc. Tobacco Warehouse, Inc. v. Briggs
Tobacco and Specialty Co., No. 3:09-CV-5078, 2010 WL
3522476, at *1 (W.D. Mo. Sept. 2, 2010); 11 Charles Alan
Wright, Arthur R. Miller, and Mary Kay Kane, Federal Practice
and Procedure § 2852 (2nd ed. 1995). A district court
has broad discretion in deciding whether to grant a Rule
59(e) or 60(b) motion, so long as manifest errors of law or
fact, or exceptional circumstances (such as newly discovered
evidence that was not available at the time the order was
given) exist. See Arnold v. ADT Sec. Servs., 627
F.3d 716, 721 (8th Cir. 2010) (discussing Rule 60(b));
see also Disc. Tobacco, 2010 WL 3522476, at *1
(discussing Rules 59(e), 60(b)).
Court has even greater discretion to grant a motion to
reconsider an interlocutory order. Disc. Tobacco,
2010 WL 3522476, at *2. The Court also has an interest in
judicial economy and ensuring respect for the finality of its
decisions, values which would be undermined if it were to
routinely reconsider its interlocutory orders. Id.
Accordingly, the Court may reconsider an interlocutory order
only if the moving party demonstrates (1) that it did not
have a fair opportunity to argue the matter previously, and
(2) that granting the motion is necessary to correct a
significant error. Id.; see also Trickey v.
Kaman Indus. Techs. Corp., No. 1:09-CV-00026-SNLJ, 2011
WL 2118578, at *2 (E.D. Mo. May 26, 2011).
support of its motion for reconsideration, ESI contends the
Court's order conflated two principles of contract law:
(1) the common law doctrine that a non-breaching party's
performance is excused by a material breach; and (2) the
right of a party to terminate a contract pursuant to an
express termination provision. ESI argues that issues of
materiality do not apply to express contract termination
terms, citing, inter alia, Mers v. Franklin Ins.
Co., 68 Mo. 127, 131 (1878), and St. Louis Produce
Market v. Hughes, 735 F.3d 829, 832 (8th Cir. 2013).
Further, ESI asserts that imposing a condition of materiality
on express contract termination provisions - as the Court
does in its summary judgment order - essentially alters the
terms of the relationship to which the parties agreed and is
contrary to well-established law.
responds that the denial of summary judgment was based
primarily on ambiguities in the Provider Agreement, not on
“materiality.” HMC asserts that its position has
always been that it did not breach the Agreement, and that
the question of materiality never arises in the absence of a
breach. Further, HMC relies on Reuter v. Jax Ltd.,
Inc., 711 F.3d 918, 921 (8th Cir. 2013) (under Minnesota
law), which holds that “even when express conditions of
the contract are violated, the breach is not necessarily
argued on summary judgment that under the express terms of
the Provider Agreement, any one of HMC's multiple
breaches gave ESI the right to terminate their relationship.
Specifically, ESI asserted it had the contractual right to
terminate the Agreement if it became aware of any copayment
or cost-sharing discounts offered by HMC. ESI identified a
number of other misrepresentations made by HMC on the
Provider Certification questionnaire concerning state
licensure, the use of non-FDA approved compounds, and the use
of pre-printed prescription forms, as a basis for immediate
termination. ESI takes exception to the Court's analysis
of materiality in the face of these express termination
correct that parties can agree in advance to conditions that
terminate their contractual relationship and performance
obligations, provided those terms are clearly enforceable,
and that in those cases, materiality may not be at issue. In
its original order, the Court found the provisions relied
upon by ESI were subject to interpretation, raising genuine
issues of material fact as to whether HMC breached the
Agreement, thereby triggering ESI's right to terminate
HMC from its provider network. ESI argued the evidence
demonstrated that HMC did not collect copayments, thereby
effectively waiving or discounting them. Because the
Certification questionnaire did not ask whether HMC collected
all copayments, and because the Agreement did not define what
constitutes a “waiver” or “discount”
of copayments, the Court found the contractual requirements
regarding collection of copayments ambiguous. The Court found
the other Certification questions at issue were susceptible
of multiple reasonable interpretations, such that the Court
could not conclude that HMC's responses were untrue.
Because these provisions were not clearly enforceable, the
Court properly considered the materiality of the conditions
purporting to trigger ESI's termination rights.
there is a duty of good faith and fair dealing implied in the
performance and enforcement of every contract. See
Danella Sw., Inc. v. Sw. Bell Tel. Co., 775 F.Supp.
1227, 1235-36 (E.D. Mo. 1991), aff'd, 978 F.2d 1263 (8th
Cir. 1992) (citing Restatement (Second) of Contracts §
205). This duty prevents a party from using contract
provisions to “evade the spirit of the
transaction” or “deny [the other party] the
expected benefit of the contract, ” BJC Health Sys.
v. Columbia Cas. Co., 478 F.3d 908, 914 (8th Cir. 2007)
(internal quotation omitted), and thus impacts the
interpretation of the provisions relied upon by ESI. Stated
differently, “parties to a contract have an implied
duty to cooperate to enable performance of the expected
benefits of the contract and this duty is an enforceable
contract right.” Reliance Bank v. Paramont
Properties, LLC, 425 S.W.3d 202, 206 (Mo.Ct.App. 2014).
In particular the Court remains unpersuaded by ESI's
argument that the failure to collect ...