152 F. Supp. 3d 127
S.D.N.Y.2016Background
- Park Irmat Drug Corp. (Irmat), a Manhattan pharmacy, expanded into mail-order dermatology prescriptions and derived ~27% of revenue from Optum members by 2015.
- OptumRx (Optum), a large PBM, administers separate retail and mail-order pharmacy networks; Optum requires specific accreditations for mail-order participation and operates its own mail-order pharmacy.
- Irmat contracted with PSAO AccessHealth in 2012; in 2015 AccessHealth and Optum executed a new network agreement (the 2015 Agreement) that prohibited retail-network pharmacies from engaging in mail fulfillment without Optum’s written approval and authorized termination for violations.
- Exhibit A to the 2015 Agreement (listing pharmacies) was not attached, but Optum treated Irmat as a participating pharmacy based on AccessHealth data; Optum notified Irmat in August 2015 of breach and informed Irmat it could apply to Optum’s mail-order network.
- Optum terminated Irmat effective November 30, 2015 after Irmat continued to fill mail orders; Irmat sued for breach of contract, equitable estoppel, tortious interference, and Donnelly Act antitrust violations and moved for a TRO/PI.
- The district court found Irmat would suffer potentially irreparable harm but denied preliminary relief because Irmat was unlikely to succeed on the merits and the balance of hardships did not tip decidedly in its favor.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Irmat is bound by the 2015 Agreement (breach of contract) given lack of direct notice / missing Exhibit A | Irmat: No binding contract with Optum; AccessHealth failed to provide required summaries and did not obtain Irmat’s ratification | Optum: AccessHealth had actual authority to bind Irmat; Optum treated Irmat as enrolled; Optum may terminate for mail fulfillment per the 2015 Agreement | Held: Irmat is bound. Missing Exhibit A is not fatal; AccessHealth had authority under Irmat/AccessHealth agreement; no breach-of-contract likelihood for Irmat against Optum |
| Waiver / implied covenant of good faith & fair dealing | Irmat: Optum waived termination rights by reimbursing mail-order claims for years; Optum acted in bad faith by abrupt enforcement | Optum: No waiver (contract’s no-waiver clause); Optum acted within contractual rights and offered cure/application to mail-order network | Held: Waiver and bad-faith claims fail; no likely success — contract terms (including no-waiver) and Irmat’s continued breach undermine claim |
| Equitable estoppel (reliance on Optum conduct) | Irmat: Relied on Optum’s prior reimbursements and expanded business; lacked means to know true facts | Optum: Irmat had contractual relationships and means to know; estoppel inappropriate where contract governs | Held: Irmat unlikely to prevail; estoppel inapplicable given contract and Irmat/AccessHealth relationship |
| Donnelly Act / antitrust (tying & unreasonable restraint) | Irmat: 2015 Agreement unlawfully ties retail participation to mail-order and unreasonably restrains trade | Optum: Properly permits credentialed pharmacies to operate mail and retail; no negative tying; Optum’s restrictions relate to credentialing and safety | Held: Antitrust claims unlikely to succeed — plaintiff fails to show negative tying or adverse effect on competition; tying theory poorly supported on facts |
Key Cases Cited
- Mazurek v. Armstrong, 520 U.S. 968 (preliminary injunction is extraordinary; movant must clearly show entitlement)
- Winters v. Natural Res. Def. Council, 555 U.S. 7 (preliminary injunction standards and the requirement that movant demonstrate likely success or serious questions)
- Citigroup Global Markets, Inc. v. VCG Special Opportunities Master Fund Ltd., 598 F.3d 30 (2d Cir.) (standard: irreparable harm plus likelihood of success or serious questions and balance of hardships)
- Salinger v. Colting, 607 F.3d 68 (2d Cir.) (courts must consider public interest in injunction analysis)
- Julien J. Studley, Inc. v. New York News, Inc., 70 N.Y.2d 628 (N.Y.) (an express contract covering subject matter precludes implication of separate contract)
- Cobble Hill Nursing Home, Inc. v. Henry & Warren Corp., 74 N.Y.2d 475 (N.Y.) (courts should supply missing terms by reference to objective standards before declaring agreement indefinite)