Express Scripts 2011 Annual Report Download - page 36

Express Scripts 2011 Annual Report
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California law. The complaint alleges that we, and the other defendants, failed to comply with statutory
obligations under California Civil Code Section 2527 to provide our California clients with the results of a bi-
annual survey of retail drug prices. On July 12, 2004, the case was dismissed with prejudice on the grounds that
the plaintiffs lacked standing to bring the action. On June 2, 2006, the U.S. Court of Appeals for the Ninth Circuit
reversed the district court's opinion on standing and remanded the case to the district court. The district court’s
denial of defendants’ motion to dismiss on first amendment constitutionality grounds is currently on appeal to the
Ninth Circuit. Plaintiffs have filed a motion for class certification, but that motion has not been briefed pending
the outcome of the appeal. On July 19, 2011, the Ninth Circuit affirmed the district court’s denial of defendants’
motion to dismiss. On August 16, 2011, the Company filed a petition for rehearing en banc for the Ninth Circuit’s
reconsideration of its ruling on defendants’ motion to dismiss, which was granted on October 31, 2011.
North Jackson Pharmacy, Inc., et al. v. Express Scripts (Civil Action No. CV-03-B-2696-NE, United States
District Court for the Northern District of Alabama) (filed October 1, 2003). This case purports to be a class
action against us on behalf of independent pharmacies within the United States. The complaint alleges that
certain of our business practices violate the Sherman Antitrust Act, 15 U.S.C §1, et. seq. The suit seeks
unspecified monetary damages (including treble damages) and injunctive relief. Plaintiffs’ motion for class
certification was granted on March 3, 2006. A motion filed by the plaintiffs in an antitrust matter against Medco
and Merck in the Eastern District of Pennsylvania before the Judicial Panel on Multi-District Litigation requesting
transfer of this case and others to the Eastern District of Pennsylvania for MDL treatment was granted on August
24, 2006. We filed a motion to decertify the class on January 16, 2007, which has been fully briefed and argued.
The case remained dormant until April 19, 2011, when it was reassigned to a new judge and the parties were
ordered to submit supplemental briefing on the issue of class certification. Supplemental briefing was completed
on August 26, 2011. Oral argument of all the class certification motions was heard on January 26, 2012, and the
court took the Company's motion under submission.
Irwin v. WellPoint Health Networks, et. al. (Judicial Arbitration and Mediation Services). On March 25, 2003,
Plaintiff filed a complaint in California state court against WellPoint Health Networks and certain related entities,
including one of the acquired NextRX subsidiaries (collectively ―WellPoint‖), Express Scripts, and other PBMs
alleging his right to sue under California’s Unfair Competition Law (UCL). This case purported to be a class
action against the PBM defendants on behalf of self-funded, non-ERISA health plans; and individuals with no
prescription drug benefits that have purchased drugs at retail rates. On May 6, 2004, WellPoint invoked an
arbitration clause and the case against WellPoint was stayed and sent to arbitration. On February 24, 2006,
Plaintiff served an arbitration demand against WellPoint alleging that numerous WellPoint business practices
violated the UCL and making claims on behalf of California residents who paid taxes, California residents who
were beneficiaries of non-ERISA health plans, and California residents who obtained prescription benefits from
non-ERISA health plans. On October 11, 2006, WellPoint filed its response to the arbitration demand, but
nothing further has occurred since then. Plaintiff filed a motion to dismiss the original court action against ESI on
September 18, 2008, so ESI is no longer a party to this suit.
Several lawsuits were filed by stockholders of Medco Health Solutions, Inc. (―Medco‖) challenging our proposed
merger transaction with Medco following our announcement on July 21, 2011, that we had entered into a
definitive merger agreement. The complaints in the actions name as defendants Medco and/or various members
of Medco’s board of directors as well as Express Scripts and certain of our subsidiaries that are party to the
merger agreement. Twenty-two complaints were filed in three different venues: the Court of Chancery of the
State of Delaware, in the United States District Court for the District of New Jersey, and in the Superior Court of
the State of New Jersey. The plaintiffs in the purported class action complaints generally alleged, among other
things, that (i) the members of Medco’s board of directors breached their fiduciary duties to Medco and its
stockholders by authorizing the proposed merger and (ii) Express Scripts and three of our subsidiaries - Plato
Merger Sub, Inc., Aristotle Holding, Inc. and Aristotle Merger Sub, Inc. - aided and abetted the alleged breaches
of fiduciary duty by Medco and its directors. The plaintiffs sought, among other things, to enjoin the defendants
from consummating the merger transaction on the agreed-upon terms, and unspecified compensatory damages,
together with the costs and disbursements of the action. A class was certified in the Court of Chancery of the
State of Delaware. The cases filed in the Superior Court of the State of New Jersey were stayed on August 26,
2011. On November 7, 2011, the parties entered into a memorandum of understanding in which they agreed upon
the terms of settlement, and plaintiffs agreed to withdraw applications for preliminary injunction of the acquisition
and stay all further litigation pending court approval of the settlement. The terms of the settlement are reflected in
the Amendment No. 1 to Agreement and Plan of Merger, which was included as Exhibit 2.1 to the Company’s
Current Report on Form 8-K filed November 8, 2011. A settlement hearing is scheduled before the United States
District of New Jersey on April 16, 2012.