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Amerisource Corp. v. Rx USA International Inc.

July 6, 2010

AMERISOURCE CORPORATION, PLAINTIFF,
v.
RX USA INTERNATIONAL INC., PARSONS MEDICAL CENTER PHARMACY INC., AND PARSONS MEDICAL CENTER PHARMACY INC. (II) DEFENDANTS.



The opinion of the court was delivered by: Joan M. Azrack United States Magistrate Judge

AZRACK, J., United States Magistrate Judge

MEMORANDUM & ORDER

Now before the Court is a motion for sanctions by plaintiff Amerisource Corporation ("Amerisource") against the corporate defendants (collectively "RxUSA") and their nonparty principal Robert Drucker ("Drucker"). Amerisource alleges that Drucker fabricated evidence, gave false and misleading testimony, and failed to correct discovery responses throughout the course of the parties' nine-year, multi-million-dollar litigation alleging breach of contract, business torts, and antitrust violations. The parties briefed the issues and the Court received evidence and testimony at a hearing held on September 21, 2009. For the reasons discussed below, plaintiff's motion is granted and the Court sanctions RxUSA and Drucker, jointly and severally, in the amount of $50,000 payable to Amerisource and an additional $50,000 payable to the Clerk of this Court.

I. BACKGROUND & FINDINGS OF FACT

Familiarity with the facts is presumed. Only the facts proven at the hearing and necessary to the resolution of this motion shall be recounted here.

A. The Underlying Litigation

RxUSA began purchasing inventory for its wholesale and retail pharmacies from Amerisource in the summer of 1999. After a few months, a heated price dispute arose and each party claimed that the other owed it several hundred thousand dollars. Despite their efforts, including an exchange of demand letters through attorneys, the parties were unable to resolve the dispute and the above-captioned action ensued.

Amerisource sued in June 2001, alleging breach of contract based on RxUSA's failure to pay past due invoices totaling over $275,000. RxUSA promptly counterclaimed for breach of contract, alleging that Amerisource had overcharged RxUSA and failed to honor various verbal discounts promised by Amerisource sales representative Wilfredo LaFontaine ("LaFontaine"). RxUSA claimed that Amerisource owed it over $400,000 under the contract and raised several additional related tort and antitrust counterclaims for over $60 million in damages. Aside from the antitrust claims, which were dismissed on summary judgment, the key to the parties' dispute was price; whoever prevailed on price would prevail overall. Amerisource asserted that the negotiated contract price was WAC-0% on all products, whereas RxUSA agreed that WAC-0% was the base price, but claimed that the contract included several additional verbal discounts.

RxUSA's largest claimed discount was a WAC-15% discount on insulin products, which would have resulted in a savings to RxUSA of several hundred thousand dollars.

The action concluded in a complete success for Amerisource. RxUSA's antitrust and defamation counterclaims were dismissed or withdrawn before trial and the contract and tort claims that proceeded to trial were all decided in favor of Amerisource. After a bench trial on the contract claims, the Court found, among other things, that the parties' contract did not include a WAC-15% insulin discount and awarded Amerisource over $1.8 million in damages, prejudgment interest, and contractual attorneys' fees and costs.

B. The Fabricated Emails

Amerisource seeks sanctions against Drucker and RxUSA for creating and using four fake emails*fn1 to support their WAC-15% insulin discount claim. The fake emails were created by inserting WAC-15% language into authentic emails that had actually been exchanged between Drucker and LaFontaine in October and November 1999.

The authentic emails had almost no probative value. However, as altered they provided the sole written corroboration of RxUSA's most valuable factual claim. Drucker denies creating the altered emails and asserts that he did not know they were fabricated when he relied upon them during discovery and motion practice and when he verified their authenticity at depositions. He admits that he eventually realized they were fake in March 2004, but ...


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