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DRUG EMPORIUM v. BLUE CROSS OF WESTERN NEW YORK

June 28, 2000

DRUG EMPORIUM, INC., PLAINTIFF,
V.
BLUE CROSS OF WESTERN NEW YORK, INC., RITE AID CORPORATION; AND TOPS MARKETS, INC., DEFENDANTS.



The opinion of the court was delivered by: Curtin, District Judge.

INTRODUCTION

This case arises from an agreement between defendant Healthnow New York, Inc., d/b/a Blue Cross of Western New York ("Blue Cross"), and defendants Rite Aid Corporation ("Rite Aid") and Tops Markets Corporation ("Tops") to create an exclusive pharmacy network for Blue Cross insureds. Upon learning that its Vix drugstores ("Vix") were excluded from the network, plaintiff Drug Emporium, Inc. ("Drug Emporium") filed the present action, alleging that the exclusive pharmacy network violated federal and state antitrust and tort laws.

Currently before this court is defendants' motion to dismiss plaintiff's first four causes of action pursuant to Fed. R.Civ.P. 12(b)(6). Items 17, 33. Plaintiff responds in opposition. Item 36.

BACKGROUND

For the purposes of this motion, the following facts pled in plaintiff's complaint are deemed true. Defendant Blue Cross is a health insurance company that sells Health Maintenance Organization ("HMO") indemnity and Preferred Provider Organization ("PPO") insurance. Historically, plaintiff Drug Emporium enjoyed a good business relationship with Blue Cross.*fn1

Although the contract between Drug Emporium and Blue Cross permitted either party to terminate the relationship on thirty days' written notice, plaintiff claims it reasonably expected that its business relationship with Blue Cross would continue. Item1, ¶ 26. On June 30, 1999, however, Blue Cross exercised its right to terminate its relationship with plaintiff when Blue Cross announced that it was forming an exclusive pharmacy network ("the network") with Rite Aid, Tops, and the independently owned pharmacies in the Western New York region. Previously, Blue Cross insureds with pharmacy benefits received coverage for purchases of prescription drugs at any pharmacy in "the Buffalo area," including plaintiff's Vix drugstores. Item 1, ¶ 17. Under the exclusive pharmacy agreement, Blue Cross's pharmacy coverage would be limited to prescription drugs purchased at Rite Aid, Tops, and independently owned pharmacies. Item 1, ¶ 20.

Shortly after the June 30, 1999 announcement, Blue Cross directed those insureds affected by the network to transfer their prescriptions to Rite Aid or another store within the exclusive network.*fn2 Id. Initially, Blue Cross intended for the network to go into effect on August 1, 1999 with a 30-day grace period; however, the company later decided to delay the effective date of the network until October 1, 1999. Item 1, ¶ 2.

Plaintiff claims that it contacted Blue Cross and expressed a desire to be included in the network but was denied the opportunity to submit a bid regarding the prices of its prescription drugs. Item 1, ¶ 24. Wegman's Pharmacy, however, was allowed to submit a bid and was then added to the network sometime between the announcement of the delay and the filing of this lawsuit. Id. ¶ 21.

Plaintiff's complaint filed on August 19, 1999 alleges six causes of action. Count One alleges that the exclusive pharmacy network is a per se violation of the Sherman Act, 15 U.S.C. § 1, and the Donnelly Act, N.Y. General Business Law § 340, et seq. Count Two claims that the network violates the rule of reason. Plaintiff's third claim generally asserts that defendants tortiously interfered with plaintiff's relationships with its customers, while Count Four specifically alleges that Tops and Rite Aid interfered with plaintiff's business relations with defendant Blue Cross.*fn3

On August 20, 1999, plaintiff moved for expedited discovery pursuant to Fed. R.Civ.P. 6(a) and Local Rule 7.1(a). Item 2. The court denied this motion on August 31, 1999, and directed plaintiff to file a motion for a preliminary injunction or, in the alternative, to refile its motion for expedited discovery. Item 13.

On September 10, 1999, defendants filed the present motion to dismiss under Fed. R.Civ.P. 12(b)(6). Items 17 and 33. Before the court could consider the motion, on September 17, 1999, plaintiff filed a motion to enjoin the implementation of the exclusive pharmacy network based on plaintiff's tort law claims. Item 22. Oral argument on plaintiff's application for an injunction was heard on September 30, 1999. At the conclusion of oral argument, the court denied plaintiff's motion, holding that plaintiff failed to demonstrate that it was likely to succeed on the merits of its tort law claims. The court then directed plaintiff to respond to defendants' motion to dismiss.

DISCUSSION

I. Fed.R.Civ.P. 12(b)(6) Standard

"On a motion to dismiss, the court looks to the four corners of the complaint and is required to accept a plaintiff's allegations as true and to construe those allegations in the light most favorable to plaintiff." Daniel v. American Bd. of Emergency Medicine, 988 F. Supp. 112, 118 (Arcara, J) (citing Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)); (Dacey v. New York Lawyers' Association, 423 F.2d 188, 191 (2d Cir. 1969)). "A dismissal is warranted under Rule 12(b)(6) only if `it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 62-63 (2d Cir. 1997) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). Notably, "[t]he ...


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