Filed: Sep. 04, 2020
Latest Update: Sep. 04, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 19-1774 _ Trone Health Services, Inc.; Reddish Pharmacy, Inc.; Jobos Pharmacy, Inc.; Oak Tree Pharmacy; Apex Pharmacy; Amrut Jal, L.L.C. lllllllllllllllllllllPlaintiffs - Appellants v. Express Scripts Holding Company; Express Scripts, Inc.; Express Scripts Mail Order, Inc.; Express Scripts Mail Pharmacy Service, Inc.; Does 1-20 lllllllllllllllllllllDefendants - Appellees _ Appeal from United States District Court for the Eastern Distric
Summary: United States Court of Appeals For the Eighth Circuit _ No. 19-1774 _ Trone Health Services, Inc.; Reddish Pharmacy, Inc.; Jobos Pharmacy, Inc.; Oak Tree Pharmacy; Apex Pharmacy; Amrut Jal, L.L.C. lllllllllllllllllllllPlaintiffs - Appellants v. Express Scripts Holding Company; Express Scripts, Inc.; Express Scripts Mail Order, Inc.; Express Scripts Mail Pharmacy Service, Inc.; Does 1-20 lllllllllllllllllllllDefendants - Appellees _ Appeal from United States District Court for the Eastern District..
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United States Court of Appeals
For the Eighth Circuit
___________________________
No. 19-1774
___________________________
Trone Health Services, Inc.; Reddish Pharmacy, Inc.; Jobos Pharmacy, Inc.; Oak
Tree Pharmacy; Apex Pharmacy; Amrut Jal, L.L.C.
lllllllllllllllllllllPlaintiffs - Appellants
v.
Express Scripts Holding Company; Express Scripts, Inc.; Express Scripts Mail
Order, Inc.; Express Scripts Mail Pharmacy Service, Inc.; Does 1-20
lllllllllllllllllllllDefendants - Appellees
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: January 16, 2020
Filed: September 4, 2020
____________
Before SMITH, Chief Judge, LOKEN and GRUENDER, Circuit Judges.
____________
SMITH, Chief Judge.
Pharmacy Benefit Managers (PBM) serve as third-party administrators of
prescription drug programs sponsored by employers, governmental entities, and
health plans (collectively, “plan sponsors”). They operate as middlemen between
pharmaceutical manufacturers, plan sponsors, pharmacies, and consumers—thereby
negotiating drug discounts, setting drug prices, and reimbursing pharmacies.
Ultimately, PBMs’ decisions influence the prescription drug market.
As the nation’s largest PBM, Express Scripts, Inc. (ESI) has a broad pharmacy
network, including retail pharmacies and its own pharmacy service. Appellants
(collectively, “the Pharmacies”) are five locally-owned retail pharmacies that
participate in ESI’s pharmacy network. The Pharmacies filed a lawsuit—alleging
breach of contract, attempted monopolization, and other claims—against ESI and its
affiliates (collectively, “ESI”). ESI then filed a motion to dismiss, and the district
court1 dismissed each claim with prejudice. On appeal, the Pharmacies challenge each
dismissal except for their fraud claim. For the reasons discussed herein, we affirm.
I. Background
ESI administers prescription drug coverage benefits for healthcare plan
sponsors. It also contracts with the Pharmacies to fill and dispense various
beneficiaries’ drug prescriptions. Once the Pharmacies dispense drugs to these
beneficiaries, i.e., their customers, ESI reimburses the Pharmacies for dispensing the
prescriptions. Before actually filling and dispensing the prescriptions, the Pharmacies
are required to submit detailed claims to ESI for processing and reimbursement.
These submissions include sensitive customer and prescription information. That
information consists of “the customer’s identity, address, and insurer, the medication
prescribed, the prescribing doctor, the quantity . . . and the dosage prescribed[,] . . . .
the patient’s mailing address[,] and the number of refills authorized by the
prescription.” J.A., Vol. I, at A-15.
1
The Honorable Ronnie L. White, United States District Judge for the Eastern
District of Missouri.
-2-
The Pharmacies claim that ESI does not need all of the information it requires
them to supply for confirmation of their customers’ coverage and for reimbursement.
They contend that ESI, instead, requests certain information, such as the number of
authorized refills, and uses that information for its own commercial benefit.
Specifically, the Pharmacies argue that ESI seeks the information to monopolize the
market by “forcibly switch[ing] customers from [the Pharmacies’] . . . to [ESI’s] own
mail-based pharmacies without [the Pharmacies’] or their customers’ authorization.”
Trone Health Servs., Inc. v. Express Scripts Holding Co., No. 4:18-CV-467 RLW,
2019 WL 1207866, at *1 (E.D. Mo. Mar. 14, 2019).
Against this backdrop, the Pharmacies initiated the instant lawsuit against ESI.
They alleged six causes of action that are relevant to this appeal: (1) breach of
contract, (2) breach of the implied covenant of good faith and fair dealing, (3) unfair
competition, (4) trade secret misappropriation, (5) tortious interference with a
prospective economic advantage, and (6) attempted monopolization. The district
court granted ESI’s motion to dismiss and dismissed the entire complaint with
prejudice.
In dismissing the complaint, the district court held that the Pharmacies did not
state a claim for breach of contract because their claim was based on the Health
Insurance Portability and Accountability Act of 1996 (HIPAA) and the Health
Information Technology for Economic and Clinical Health (HITECH) Act. The
parties had incorporated HIPAA and the HITECH Act into § 5.3 of their pharmacy
provider agreements (PPA). The court stated that, even under a contract-related claim,
HIPAA does not provide a private cause of action and that only the customers, and
not the Pharmacies, can authorize the use of their information. See id. at *3
(stating
that “a valid authorization under HIPAA must contain the ‘signature of the individual
and date’”(quoting 45 C.F.R. § 164.508(c)(1)(vi))).
-3-
Based on the pleadings and exhibits, the district court also held that ESI’s
provider manual and the parties’ PPAs constitute the full agreements between the
parties and that these agreements allow ESI to refill mail-order pharmacy
prescriptions for the Pharmacies’ customers. Because the agreements permit ESI to
refill prescriptions through mail order, the court concluded that the Pharmacies did
not state a claim for breach of the implied covenant of good faith and fair dealing.
Consistent with its analysis for the contract-related claims, the district court
held that the Pharmacies failed to allege claims for unfair competition, trade secret
misappropriation, and tortious interference. The court also dismissed the Pharmacies’
attempted-monopolization claim: it determined that the Pharmacies did not plead the
required element of a relevant market. In addition, the court concluded that the
Pharmacies did not assert “anticompetitive or predatory conduct from which a
specific intent to achieve monopoly power can be inferred, or a requisite antitrust
injury from said conduct.” Id. at *6.
In its dismissal motion, ESI also argued that the Pharmacies did not specifically
allege any claim against ESI’s affiliates: (1) Express Scripts Holding Co.; (2) Express
Scripts Mail Order, Inc.; and (3) Express Scripts Mail Pharmacy Service, Inc. The
Pharmacies asserted, in response, that group pleading is appropriate for this case. In
concluding its judgment, the district court dismissed the claims against ESI’s
affiliates because it had dismissed all other claims in the case. Afterward, the
Pharmacies filed this timely appeal.
II. Discussion
A. Standard of Review
“We review de novo the district court’s grant of a Rule 12(b)(6) motion to
dismiss, accepting the facts alleged in the complaint as true.” Pharm. Care Mgmt.
Ass’n v. Gerhart, 852 F.3d 722, 726 (8th Cir. 2017). Here, we also draw all
reasonable inferences in favor of the Pharmacies. See Park Irmat Drug Corp. v.
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Express Scripts Holding Co., 911 F.3d 505, 512 (8th Cir. 2018). “Dismissal is proper
where the [Pharmacies’] complaint fails ‘to state a claim upon which relief can be
granted.’” Bell v. Pfizer, Inc.,
716 F.3d 1087, 1091 (8th Cir. 2013) (quoting Fed. R.
Civ. P. 12(b)(6)). Additionally, “[w]e assess [the] plausibility [of the Pharmacies’
complaint by] considering only the materials that are necessarily embraced by the
pleadings and exhibits attached to the complaint.” Park
Irmat, 911 F.3d at 512
(internal quotations omitted).
B. Contract-Related Claims
1. Breach of Contract
The Pharmacies allege that ESI breached § 5.3 of their PPAs. That section
states:
ESI shall and Provider shall, and shall cause its Pharmacies to, comply
with all federal and state laws, rules and regulations regarding the
confidentiality of patient information, including, but not limited to,
compliance with . . . HIPAA and the . . . HITECH Act, including all
applicable rules, regulations and official guidance promulgated, in
connection with HIPAA and the HITECH Act . . . .
J.A., Vol. II, at A-68. The Pharmacies contend that the district court dismissed their
claim on the “erroneous ground that, because HIPAA and the HI-TECH Act do not
provide [them] with private rights of action, [the Pharmacies] have no standing to sue
ESI for breaching contractual provisions that prohibit it from violating those and
other laws.” Appellants’ Br. at 11.
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The Pharmacies also ask us to reverse the district court because they “are not
suing under HIPAA[2] . . . and are not asserting private rights of action under th[at]
law[].” Id. They insist that they have standing to sue and enforce their contractual
rights, or legally protected interests, which flow from § 5.3 of their PPAs. The
Pharmacies maintain that ESI is using their confidential customer information without
authorization to switch their customers to ESI’s own mail-order service when ESI
should only use the information to confirm customers’ coverage and to reimburse the
Pharmacies.3 Finally, they urge us to disregard the court’s alternative reasoning: that
HIPAA only allows the Pharmacies’ customers, not the Pharmacies, to authorize the
use of their confidential health information.
ESI counters that even assuming the Pharmacies could state a claim under
HIPAA, the Pharmacies failed to plead sufficient facts demonstrating a past or an
2
From this point forward, our reference to HIPAA also includes a reference to
the HITECH Act.
3
Specifically, the Pharmacies contend that ESI has violated two provisions of
HIPAA, which can be pursued and enforced under their contract claim. In violation
of 45 C.F.R. § 164.504(g)(2), the Pharmacies first claim that ESI, as a clearinghouse,
legally receives the Pharmacies’ customer information to process and reimburse the
Pharmacies’ claims. But as a healthcare service provider, the Pharmacies allege that
ESI illegally converts the information to steal the Pharmacies’ customers upon
refilling the customers’ prescriptions. See id. § 164.504(g)(2) (“A covered entity that
performs multiple covered functions may use . . . the protected health information of
individuals who receive the covered entity’s health plan or health care provider
services, but not both, only for purposes related to the appropriate function being
performed.”). Based on this same conduct, the Pharmacies aver that ESI continues to
blatantly violate the general rule found in 45 C.F.R. § 164.508(a)(1), which provides,
“A covered entity may not use . . . protected health information without an
authorization that is valid . . . . When a covered entity obtains or receives a valid
authorization for its use . . . of protected health information, such use . . . must be
consistent with such authorization.”
-6-
ongoing HIPAA violation. It maintains, however, that the Pharmacies do not have
rights to enforce HIPAA. Furthermore, ESI contends that its HIPAA compliance is
statutorily mandated and is a legal duty that preexists the parties’ contractual
agreements.
Under Missouri law, “the complaining party must establish the existence of a
valid contract, . . . a breach by defendant, and damages resulting from the breach.”
Lucero v. Curators of Univ. of Mo., 400 S.W.3d 1, 5 (Mo. Ct. App. 2013) (internal
quotation omitted). Here, the parties dispute only the breach element.
As the district court stated, we have recognized that “HIPAA does not create
a private right of action” as an underlying basis for a civil suit. Dodd v. Jones, 623
F.3d 563, 569 (8th Cir. 2010). But we have yet to address whether HIPAA’s lack of
a private right of action bars a plaintiff’s state-law, breach-of-contract claim where
(1) a contract has incorporated HIPAA by reference and (2) the plaintiff is not an
actual patient, beneficiary, or customer asserting that a defendant committed a misuse
violation of his protected health information.
The Pharmacies cite numerous cases for the proposition that “federal statutes
can supply the standards of conduct or legal duties whose breaches form the basis for
state common law claims even when those federal statutes do not themselves permit
any private right of action.” Appellants’ Br. at 15 (citing Hofbauer v. Nw. Nat. Bank
of Rochester, 700 F.2d 1197, 1199 (8th Cir. 1983); Iconco v. Jensen Constr. Co.,
622
F.2d 1291 (8th Cir. 1980)).4
4
The Pharmacies also cite several other cases. See Appellants’ Br. at 12–14
(citing Bukowski v. Wells Fargo Bank, N.A., 757 F. App’x 124, 128 (3d Cir. 2018)
(“That [the Home Affordable Modification Program] does not provide a private cause
of action, however, does not mean that it precludes state law claims altogether.”);
Smith v. JPMorgan Chase Bank, N.A., 519 F. App’x 861, 864 (5th Cir. 2013)
-7-
Neither Hofbauer nor Iconco addressed HIPAA specifically, but they do
provide relevant analysis. In Hofbauer, we concluded that the National Flood
Insurance Act (NFIA) does not expressly or implicitly create a federal right of action
but determined that its absence did not bar the NFIA from “creat[ing] a standard of
conduct which, if broken, would give rise to an action for common-law negligence.”
700 F.2d at 1201. When deciding Hofbauer, we cited Iconco, where we had, three
years prior, held that the federal Small Business Act—which did not provide a right
to sue—could serve as the underlying basis for state claims of fraud and unjust
enrichment.
Id. (citing Iconco, 622 F.2d at 1296). Upon our review, Hofbauer and
Iconco are consistent with similar cases decided by our sister circuits.5 Based on our
circuit precedent, we conclude that the district court erred in dismissing the
(“Federal statutes and regulations can form the basis of a breach-of-contract claim if
the parties expressly incorporate them into their contract.”); Bible v. United Student
Aid Funds, Inc.,
799 F.3d 633, 654 (7th Cir. 2015) (“The absence of a private right
of action from a federal statute provides no reason to dismiss a claim under a state
law just because it refers to or incorporates some element of the federal law. To find
otherwise would require adopting the novel presumption that where Congress
provides no remedy under federal law, state law may not afford one in its stead.”
(quoting Wigod v. Wells Fargo Bank, N.A.,
673 F.3d 547, 581 (7th Cir. 2012));
Yazdianpour v. Safeblood Techs., Inc.,
779 F.3d 530, 536 (8th Cir. 2015) (deciding
that licensees—as parties to contract—had standing to sue for breach of contract);
Bates v. JPMorgan Chase Bank, NA,
768 F.3d 1126, 1132 (11th Cir. 2014)
(recognizing that the contractual terms referencing the Department of Housing and
Urban Development regulations, which do not provide for a federal private right of
action, as conditions precedent, can serve as the basis for a breach-of-contract action);
In re: Premera Blue Cross Customer Data Sec. Breach Litig., No. 3:15-MD-2633-SI,
2017 WL 539578, at *15 (D. Or. Feb. 9, 2017) (“The fact that there is no private right
of action under HIPAA, however, does not preclude causes of action under state law,
even if such a cause of action requires as an element that HIPAA was violated.”)).
5
See supra n.3.
-8-
Pharmacies’ breach-of-contract claim on the basis that HIPAA lacks a private cause
of action.
In addition, the Pharmacies state it is irrelevant that HIPAA does not confer
upon them “the right to direct or control ESI’s use of [the customers’] private
information and data.” Appellants’ Br. at 18 (citing ABF Freight Sys., Inc. v. Int’l
Bhd. of Teamsters, 645 F.3d 954, 959–61 (8th Cir. 2011) (holding that ABF
possessed a legally protected interest in enforcing its contract with the bargaining unit
although ABF was not an actual party to the multi-employer, collective-bargaining
agreement that ABF alleged was violated)). Does HIPAA permit the Pharmacies to
control the use of their customers’ information? The district court concluded—and
ESI asserts—that it does not. If the Pharmacies lack this ability under HIPAA, they
have no rights to enforce HIPAA. We agree that, textually, HIPAA does not authorize
the Pharmacies to direct or control the use of their customers’ information and does
not grant the Pharmacies power to enforce their customers’ rights. But our analysis
does not end there.
We also agree that the Pharmacies failed to allege a breach of contract based
upon an alleged past or ongoing HIPAA violation. The Pharmacies alleged in their
complaint that ESI uses their confidential customer information without authorization
from the customers themselves, who have the right to direct the use of their own
information, which—according to the Pharmacies—implies a HIPAA violation. But
this is not enough to support a breach-of-contract claim alleging that ESI forcibly
steals the Pharmacies’ customers by refilling the customers’ prescriptions without the
authority to do so. It is undisputed that ESI’s “authorization” to collect and use the
Pharmacies’ customers’ HIPAA-protected information in administering the filling of
prescriptions comes from the plan sponsors, who have a fiduciary duty to act in the
best interests of the Pharmacies’ customers. See Compl. at 6–7, ¶¶ 21–26, Trone
-9-
Health Servs., Inc. v. Express Scripts Holding Co., No. 4:18-cv-00467-RLW (E.D.
Mo. Mar. 28, 2018), ECF No. 1.
The Pharmacies failed to allege that ESI’s use of their customers’
HIPAA-protected information to provide lower cost mail order refills lacked the
express authorization of the plan sponsors and, thus, the implied authorization of the
customers seeking to have their prescription costs covered by their plans.6 Without
the requisite “facial plausibility” demonstrating the Pharmacies’ contract claim, we
cannot “draw the reasonable inference that . . . [ESI] is liable for the [breach]
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
2. Breach of the Implied Covenant
In addition to their breach-of-contract claim, the Pharmacies also sued for
breach of the implied covenant of good faith and fair dealing. The Pharmacies
contend that the district court erred in concluding that the parties’ agreements allow
ESI to refill their customers’ prescriptions. They assert that their PPAs contain no
express provision permitting ESI to transfer the prescriptions of the Pharmacies’
customers to its own mail-order pharmacy. They further argue that the first “Recital”
is the only portion of their PPAs that references mail order and that this “Recital does
not say that ESI or its affiliates own or operate their own mail order pharmacies.”
6
Aside from complaining about the lack of an opportunity to amend their
complaint if they failed to plead sufficient factual allegations supporting a
breach-of-contract claim, the Pharmacies also contend that the district court’s order
did not address the sufficiency of their factual allegations regarding their
breach-of-contract claim. See Appellants’ Reply Br. at 2–3. Even accepting the
Pharmacies’ argument as true, “we may affirm the district court on any basis that is
supported by the record.” McCrary v. Stifel, Nicolaus & Co., 687 F.3d 1052, 1058
(8th Cir. 2012) (cleaned up).
-10-
Appellants’ Br. at 23. They insist that their implied-covenant claim should survive
ESI’s dismissal motion because the contract does not expressly permit ESI’s conduct.
The Pharmacies also claim that the district court erred by dismissing their claim
based on a misconstruction of an ambiguous provision of the parties’
agreements—§ 2.4 of the provider manual. Specifically, the Pharmacies argue that the
court erred when it found that ESI owns the Pharmacies’ customer information upon
claim submissions. According to the Pharmacies, “[s]ection 2.4 of the [Network
Provider Manual] distinguishes between (1) the ‘claims submitted by’ [the
Pharmacies] and (2) the information ESI obtains through the administration and
processing of those claims.” Id. at 26 (quoting J.A., Vol. II, at A-92). The Pharmacies
state that the plain meaning of § 2.4 provides ESI with “ownership of information it
obtains when administering and processing [the Pharmacies’] claims.”
Id. This only
includes information such as a customer’s “eligibility for coverage, the co-pay owed
by the [customer] and restrictions on the [customer’s] prescriptions.”
Id. at 27. The
Pharmacies allege that the information extends no further.
ESI disputes the Pharmacies’ interpretation of their agreements. ESI asserts that
it cannot breach the implied covenant of good faith and fair dealing when the parties’
agreements expressly permit the conduct that is being challenged by the Pharmacies.
It requests that we affirm the district court’s dismissal because the Pharmacies have
failed to plead or argue that its actions have exceeded the terms of their agreements.
As determined by the district court and not disputed on appeal, the parties full
agreements consist of their PPAs and ESI’s provider manual. See J.A., Vol. II, at
A-58 (“1.13 ‘Provider Manual’ shall mean the written handbook describing the
practices, rules, operational requirements and policies and procedures established by
ESI for Provider (and its Pharmacies) regarding their provision of Covered
Medications to Members.” (bold omitted)); id. at A-69 (“7.3 Entire Agreement. This
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[PPA], including . . . [the] Provider Manual, . . . constitutes the entire agreement of
the parties with respect to the subject matter herein . . . .” (bold and underline
omitted)).
“Missouri law implies a covenant of good faith and fair dealing in every
contract.” Kmak v. Am. Century Cos., Inc., 754 F.3d 513, 516 (8th Cir. 2014) (quoting
Farmers’ Elec. Coop., Inc. v. Mo. Dep’t of Corr.,
977 S.W.2d 266, 271 (Mo. 1998)
(en banc)).
To establish a breach of the covenant of good faith and fair dealing, “the
plaintiff has the burden to establish that the defendant ‘exercised a
judgment conferred by the express terms of the agreement in such a
manner as to evade the spirit of the transaction or so as to deny [the
plaintiff] the expected benefit of the contract.’”
Id. (alteration in original) (quoting
Lucero, 400 S.W.3d at 9–10). However, “when
there has been ‘no subterfuge,’ and the contract’s ‘express terms’ allowed for the
challenged action, there is no bad faith and thus no breach of the implied covenant.”
CitiMortgage, Inc. v. Chi. Bancorp, Inc.,
808 F.3d 747, 752 (8th Cir. 2015) (quoting
The Arbors at Sugar Creek Homeowners Ass’n v. Jefferson Bank & Tr. Co.,
464
S.W.3d 177, 185 (Mo. 2015) (en banc)).
Here, the district court properly determined the intent of the parties by
interpreting their unambiguous agreements. See id. at 751
(“Missouri courts interpret
a contract to give effect to the parties’ intent and, when a contract is unambiguous,
intent ‘is discerned solely from the contract’s language.’” (quoting The
Arbors, 464
S.W.3d at 183)). We agree that the parties’ agreements permit ESI, through its own
mail-order service, to dispense the pre-authorized refills of their plan sponsors’
members, i.e, the Pharmacies’ customers. Therefore, we reject the Pharmacies’
arguments otherwise.
-12-
The operative provisions of the parties’ agreements include the first recital and
§ 2.8 of the PPAs and § 2.4 of the provider manual. The first recital states,
“WHEREAS, ESI administers and manages Prescription Drug Programs for its
Sponsors . . . , which programs include claims administration, mail service dispensing
and other pharmacy benefit management services . . . .” J.A., Vol. II, at A-57
(emphasis added). Next, § 2.8 of the PPAs requires the Pharmacies “to, cooperate
with ESI, including providing to ESI any and all information requested by ESI
necessary for coordinating any benefits provided to any Member.” Id. at A-61.
By the plain language of the agreements, the Pharmacies agreed to cooperate
with ESI for the coordination of their customers’ benefits. Likewise, the district court
properly concluded that “[m]ail service dispensing falls within the category of ‘any
benefit[s] provided to any Member.’” Trone Health, 2019 WL 1207866, at *4
(quoting J.A., Vol. II, at A-61). The agreements authorize ESI to administer or
manage prescription drug benefits, including mail-order service dispensing—which
can be interpreted to “include[] the filling of [customers’] prescriptions through
[ESI’s] own mail order pharmacy.”
Id. And the Pharmacies’ contention that the court
applied “the wrong definition of the word ‘administer’” is unavailing. Appellants’ Br.
at 24.
The provider manual, under § 2.4, sheds light on ESI’s right to use the
Pharmacies’ customer information. It provides, “ESI is the owner of all information
it obtains through the administration and processing of any and all pharmacy claims
submitted by Network Provider.” J.A., Vol. II, at A-92. The Pharmacies argue that
ESI does not own or control the sensitive customer information submitted to ESI but,
instead, only owns the information that ESI obtains after processing claims.
The district court determined that “ESI obtains the information from [the
Pharmacies] to administer and process pharmacy claims and that information, per the
-13-
Provider Manual, is under ESI’s control. Moreover, the Provider Manual includes no
language precluding ESI from using the customer information independent of ESI’s
relationship with [the Pharmacies].” Trone Health, 2019 WL 1207866, at *5. We
agree with the court’s construction of the contract. We have previously noted that
“the implied duty of good faith and fair dealing does not extend so far as to
undermine a party’s general right to act on its own interests in a way that may
incidentally lessen the other party’s anticipated fruits from the contract.” BJC Health
Sys. v. Columbia Cas. Co.,
478 F.3d 908, 915 (8th Cir. 2007) (internal quotation
omitted) (applying Missouri law).
The Pharmacies have not shown that ESI’s actions have “evade[d] the spirit”
of their agreements. Kmak, 754 F.3d at 516. The parties’ agreements give ESI access
to the Pharmacies’ customer information and do not prevent its use for mail-order
service dispensing. Thus, the district court did not err in dismissing the Pharmacies’
claim for breach of the implied covenant of good faith and fair dealing.
C. Unfair Competition and Trade Secret Misappropriation
The Pharmacies combine their state-law claims for unfair competition and trade
secret misappropriation and, in essence, assert that their unfair competition claim is
founded on ESI’s alleged misuse of the Pharmacies’ trade secrets. They maintain that
ESI shared the Pharmacies’ trade secrets with its affiliates in order to steal the
Pharmacies’ customers and that the district court’s dismissal of their claims was based
“on its erroneous construction of the parties’ contracts.” Appellants’ Br. at 33. The
Pharmacies state that ESI does not own the sensitive customer information that they
submit to ESI and that such “data and information [are] painstakingly developed and
compiled by [them] at considerable effort and expense”—which qualifies the
information as the Pharmacies’ trade secrets that should be afforded legal protection.
Id. Conversely, ESI asserts that the Pharmacies’ theory—“ESI’s use of information
provided under the Agreements amounts to a misappropriation of the Pharmacies’
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trade secrets”—fails because its conduct is consistent with the terms of their
agreements. Appellees’ Br. at 30.
To demonstrate unfair competition and misappropriation of trade secrets, the
Pharmacies’ factual allegations must show “1) the existence of . . . trade secret[s], 2)
the communication of the trade secret[s] to another, . . . and 3) the use of the trade
secret[s] that damaged [the Pharmacies].” Conseco Fin. Servicing Corp. v. N. Am.
Mortg. Co., 381 F.3d 811, 818 (8th Cir. 2004) (applying Missouri law). “Missouri
courts have described the tort [of unfair competition] as a ‘reaffirmation of the rule
of fair play’ and a protection against companies deceiving the public.” Tension
Envelope Corp. v. JBM Envelope Co.,
876 F.3d 1112, 1121 (8th Cir. 2017) (citing
Cushman v. Mutton Hollow Land Dev., Inc.,
782 S.W.2d 150, 157–59 (Mo. Ct. App.
1990)).
“A trade secret can be any . . . compilation of information which is used in
one’s business, and which gives him an opportunity to obtain an advantage over
competitors who do not know or use it.” Brown v. Rollet Bros. Trucking Co., 291
S.W.3d 766, 776 (Mo. Ct. App. 2009) (internal quotations omitted). To determine
whether information is actually a trade secret, courts consider factors such as “the
extent to which the information is known outside of [plaintiff’s] business; . . . the
amount of effort or money expended by [plaintiff] in developing the information;
[and] . . . the ease or difficulty with which the information could be properly acquired
or duplicated by others.”
Id. (internal quotation omitted).
Missouri courts recognize customer lists as “protectable . . . trade secrets only
when they represent a selective accumulation of information based on past selling
experience, or when considerable time and effort have gone into compiling it.” Id. at
777 (internal quotation omitted). The Pharmacies state that they compile the
following: customer identity; mailing address; insurer; prescribing doctor; and
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prescribed medication, dosage, quantity, and number of refills. They contend that this
compilation of customer information is developed at great expense, time, and effort.
The Pharmacies’ arguments for trade secret protection are unpersuasive. The
district court concluded that the parties’ agreements provided ESI access to the
alleged trade secret information and did not forbid ESI from using it for mail-order
service dispensing. Hence, the court did not err in dismissing the Pharmacies’ unfair
competition and trade-secret claims.
D. Tortious Interference
Next, the Pharmacies argue that the parties’ agreements do not authorize or
permit ESI to refill the Pharmacies’ customers’ prescriptions through its own
mail-order service. Therefore, the Pharmacies claim that ESI tortiously interfered with
their business expectancy that customers will allow them, rather than ESI, to dispense
their pre-authorized refills.
In support of a claim for tortious interference with a business expectancy, the
Pharmacies are required to show “(1) a valid business expectancy; (2) defendant’s
knowledge of the relationship; (3) a breach induced or caused by defendant’s
intentional interference; (4) absence of justification; and (5) damages.”7 Rail
Switching Servs., Inc. v. Marquis-Mo. Terminal, LLC, 533 S.W.3d 245, 259 (Mo. Ct.
App. 2017) (quoting Stehno v. Sprint Spectrum, L.P.,
186 S.W.3d 247, 250 (Mo.
2006) (en banc)). “[I]n all cases where the defendant has a legitimate interest,
economic or otherwise, in the . . . expectancy sought to be protected, then the
[Pharmacies] must show that . . . [ESI] used improper means to interfere.”
Id. at 258.
7
The Pharmacies state the claim as tortious interference with a prospective
economic advantage. Missouri courts phrase the claim as tortious interference with
a business expectancy.
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After examining the allegations and considering the parties’ agreements in their
entirety, we reiterate that the parties’ agreements contemplate ESI providing
mail-order servicing to its plan sponsors’ members, i.e., the Pharmacies’ customers.
Given the language of the agreements permitting ESI to provide mail-order servicing,
the Pharmacies’ business expectancy of exclusivity in mail-order servicing is invalid,
and the district court did not err in dismissing the Pharmacies’ tortious-interference
claim.
E. Attempted Monopolization
Additionally, the Pharmacies claim that the district court’s reasons and ESI’s
arguments for dismissing their attempted-monopolization claim are not justified. The
Pharmacies posit that they alleged in their complaint “a relevant market consisting of
maintenance medications paid for by ESI’s insurance company customers.”
Appellants’ Br. at 29. They assert that the relevant market “must be measured by the
alternatives available to buyers, (i.e., patients)” and that it should not be defined to
include prescription payments from uninsured customers or other plan sponsors that
do not contract with ESI. Id. (bold omitted). According to the Pharmacies, their
customers—whose health plans contract with ESI—do not have any other options but
to accept ESI’s refill orders against their will.
The district court properly dismissed the Pharmacies’
attempted-monopolization claim. See 15 U.S.C. § 2 (stating that it is illegal to
“monopolize, or attempt to monopolize . . . any part of the trade or commerce among
the several States”).8 “To establish an attempted monopolization claim under the
Sherman Act, a plaintiff must prove: (1) a specific intent by the defendant to control
8
“The Missouri Antitrust Law, Sec. 416.031 RSMo 1986, is construed in
harmony with ruling judicial interpretations of comparable federal statutes.” Stensto
v. Sunset Mem’l Park, Inc., 759 S.W.2d 261, 266 (Mo. Ct. App. 1988) (citing Mo.
Rev. Stat. § 416.031).
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prices or destroy competition; (2) predatory or anticompetitive conduct undertaken
by the defendant directed to accomplishing the unlawful purpose; and (3) a dangerous
probability of success.” HDC Med., Inc. v. Minntech Corp., 474 F.3d 543, 549 (8th
Cir. 2007) (internal quotation omitted). “Dangerous probability of success is
examined by reference to the offender’s share of the relevant market.”
Id. at 550
(internal quotation omitted). A relevant market breaks down into (1) “a product
market and [(2)] a geographic market.”
Id. at 547. And we have noted that a “relevant
product market,” which is at dispute here, has to “include[] all reasonably
interchangeable products.” Park
Irmat, 911 F.3d at 517 (internal quotation omitted).
In Park Irmat, ESI asked the district court to dismiss the appellant’s complaint,
which included an attempted-monopolization claim. Park Irmat claimed that the
relevant product market for its attempted-monopolization claim consisted of the
“mail-order pharmacy services to Express Scripts members—a submarket made up
of only Express Scripts’s services within the broader market of all mail-order
pharmacy services.” Id. We affirmed the court’s dismissal of the
attempted-monopolization claim while concluding that Park Irmat’s alleged product
market was too narrowly defined.
Id.
Here, the Pharmacies allege a similar relevant product market as that found in
Park Irmat—maintenance medications paid for by ESI’s plan sponsors. We, again,
hold that this product market is too narrowly defined. That is to say, it does not
include all interchangeable payment options to the Pharmacies.9 These options
9
Park Irmat’s § 2 or attempted-monopolization claim was that ESI “exclude[d]
mail-order pharmacies from its PBM network.” Park Irmat, 911 F.3d at 517. Here,
unlike in Park Irmat, the Pharmacies’ attempted-monopolization claim is that ESI
excludes them from competing in the “aftermarket,” which is the refilling of
prescriptions paid for by ESI members, i.e., the plan sponsors. Based on Eastman
Kodak Co. v. Image Tech. Servs., Inc., we recognize that the “aftermarket” in this case
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include medication payments from uninsured customers and PBMs other than ESI.
See, e.g., id.; Little Rock Cardiology Clinic PA v. Baptist Health, 591 F.3d 591,
597–98 (8th Cir. 2009) (rejecting appellant’s argument “that the product market
should be limited to patients using private insurance because private insurance and
government insurance—the other primary method of payment—are not reasonably
interchangeable”).
In Little Rock Cardiology Clinic, we stated that “[t]he trouble with [appellant’s]
theory is that it analyzes the issue from the wrong side of the transaction . . . . [It] is
not about the options available to patients[;] it is about the options available to
shut-out cardiologists.” 591 F.3d at 597. There, “[w]e conclude[d] that, as a matter
of law, in an antitrust claim brought by a seller, a product market cannot be limited
to a single method of payment when there are other methods of payment that are
acceptable to the seller.”
Id. at 598. The same holds true in this case.
Accordingly, it is not necessary for us to analyze the Pharmacies’ remaining
arguments in support of its attempted-monopolization claim. See id. at 596
(“Without
a well-defined relevant market, a court cannot determine the effect that an allegedly
illegal act has on competition.”). The Pharmacies did not plead sufficient facts to
meet their “burden of alleging a relevant market in order to state a plausible antitrust
claim.”
Id.
can serve as a separate market in which ESI could potentially hold sufficient
monopoly power.
504 U.S. 451, 482 (1992) (“This Court’s prior cases support the
proposition that in some instances one brand of a product can constitute a separate
market.”). But as we highlighted in our analysis, we reject the Pharmacies’ alleged
relevant market here, i.e., the “aftermarket,” on the basis of its inadequate product
market description, which does not include all of the Pharmacies’ interchangeable
payment options.
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F. ESI’s Affiliates
Lastly, the Pharmacies note that the district court did not separately dismiss
their claims against ESI’s affiliates. Thus, they contend that if any claims against ESI
are reversed, then those claims should be reinstated against ESI’s affiliates as well.
Because we affirm the district court’s dismissal of the Pharmacies’ complaint in its
entirety, all claims against ESI’s affiliates remain dismissed.
III. Conclusion
In conclusion, we affirm the district court’s judgment.
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