Strategic Pharmaceutical Solutions, Inc. v. Nevada State Board of Pharmacy
2:16-cv-00171
D. Nev.May 24, 2016Background
- Vetsource delivers prescription pet medications directly to owners; regulated by the Nevada State Board of Pharmacy (the Board).
- The Board initiated administrative disciplinary proceedings alleging Vetsource violated Nevada’s anti-kickback statute by paying veterinarians to use its service.
- Vetsource filed a federal suit in January 2016 asserting that the Board operates an unlawful monopoly in violation of federal antitrust law.
- The Board filed a state-court action in March 2016 seeking enforcement under Nevada’s anti-kickback statute and moved in federal court to stay the federal case pending resolution of the state action.
- The court considered whether Colorado River abstention permits a stay and applied the Ninth Circuit’s multi-factor test, ultimately denying the Board’s motion to stay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Colorado River abstention applies to permit a stay of the federal antitrust suit | Vetsource argues federal court must decide its federal antitrust claims; federal jurisdiction is exclusive for those claims | Board argues parallel state proceedings and related issues justify abstention and a stay | Denied — Ninth Circuit precedent and factors weigh against Colorado River abstention |
| Whether state proceedings will resolve all issues between the parties | Vetsource: state case cannot adjudicate federal antitrust claims | Board: state action concerns overlapping conduct and could avoid duplicative litigation | Held against Board — state court cannot resolve federal antitrust claims; substantial doubt exists that state action will end litigation |
| Whether allowing federal suit will cause piecemeal litigation | Vetsource: federal and state actions raise distinct legal issues (antitrust vs. state anti-kickback) so no duplicative adjudication | Board: parallel proceedings risk piecemeal resolution and duplication | Held against Board — issues differ and courts can resolve their respective matters without relitigation |
| Whether other Colorado River factors (order, adequacy, forum shopping, rule of decision) support a stay | Vetsource: earlier federal filing, predominance of federal-law issues, exclusive federal jurisdiction, no forum shopping | Board: state proceedings have progressed and are appropriate forum for related disputes | Held against Board — factors (order, rule of decision, adequacy, forum shopping) weigh against abstention |
Key Cases Cited
- Intel Corp. v. Advanced Micro Devices, Inc., 12 F.3d 908 (9th Cir. 1993) (district court may stay only if it has full confidence parallel state proceeding will resolve the litigation)
- Eichman v. Fotomat Corp., 759 F.2d 1434 (9th Cir. 1985) (federal courts have exclusive jurisdiction over federal antitrust claims)
- Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (U.S. 1976) (establishing the abstention doctrine allowing dismissal or stay in exceptional circumstances)
- R.R. Street & Co. Inc. v. Transport Ins. Co., 656 F.3d 966 (9th Cir. 2011) (enumerating Colorado River factors and advising pragmatic, flexible approach to which forum obtained jurisdiction first)
- Am. Int’l Underwriters v. Cont’l Ins. Co., 843 F.2d 1253 (9th Cir. 1988) (example of abstention where state court had already decided substantive issues and federal suit would relitigate them)
- Travelers Indem. Co. v. Madonna, 914 F.2d 1364 (9th Cir. 1990) (federal-law issues weigh heavily against surrendering federal jurisdiction)