Pan American Life Insurance Company of Puerto Rico v. Medco Health Solutions, Inc.
3:15-cv-01173
D.P.R.Mar 3, 2016Background
- Pan American and Medco entered into an exclusive PBM services contract; Medco was the exclusive provider for Pan American and its subsidiaries.
- Medco alleged Pan American breached the exclusivity by using other providers/administrators for some member groups.
- Medco claimed damages were caused by Pan American steering business to non-Medco vendors, reducing Medco’s revenue and profits.
- Pan American moved to dismiss Medco’s counterclaim for failure to state a claim under Rule 12(b)(6); the court denied the motion.
- The Agreement is governed by New Jersey law; damages must be direct and proximate results of a breach, with potential lost profits recoverable.
- Medco asserted damages could be calculated by the profits Medco would have earned from compliant performance, despite not stating a dollar amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Medco plausibly pleads damages | Medco contends damages arise from exclusivity breach and are calculable. | Pan American argues damages are speculative. | Damages pled are plausible; not merely speculative. |
| Whether the exclusivity breach claim states a valid contract claim | Medco identifies a valid contract and breach of exclusivity. | Pan American disputes the sufficiency of the breach allegation. | Medco states a plausible breach of contract claim under New Jersey law. |
| Choice of law and damages standard | New Jersey law governs contract damages, requiring direct and proximate damages. | Not explicitly stated, but challenges in damages proof. | New Jersey law applies; damages must be direct and proximate. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (S. Ct. 2007) (pleading requires plausibility, not mere possibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (S. Ct. 2009) (twilight of conclusory pleadings; plausibility standard)
- Schatz v. Republican State Leadership Comm., 669 F.3d 50 (1st Cir. 2012) (context-based plausibility review)
- Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1 (1st Cir. 2011) (plausibility and inference from facts)
- Swierkiewicz v. Sorema N.A., 534 U.S. 506 (S. Ct. 2002) (recognizes basic notice pleading cannot be supplemented by formal requirements)
- Reliable Tire Distributors, Inc. v. Kelly Springfield Tire Co., 607 F. Supp. 361 (E.D. Pa. 1985) (damages for breach of contract must be direct and proximate)