Judge: David S. Cunningham, Case: 23STCV20886, Date: 2024-07-18 Tentative Ruling

Case Number: 23STCV20886    Hearing Date: July 18, 2024    Dept: 11

The People of the State of California v. Express Scripts, Inc. (23STCV20886)

Tentative Ruling Re: Motion to Stay Pending Appeal

Date:                           7/18/24

Time:                          10:30 am

Moving Party:           OptumRX, Inc., et al. (collectively “Defendants”)

Opposing Party:        The People of the State of California (“Plaintiff”)

Department:              11

Judge:                        David S. Cunningham III

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TENTATIVE RULING

Defendants’ motion to stay is granted in part.  Discovery is stayed until the Court decides Defendants’ demurrer.

BACKGROUND

Defendants are Pharmacy Benefit Managers  (“PBMs”).  They “administer prescription-drug benefits for health-plan sponsors, including employers, government entities, and unions.”  (Motion, p. 4.)  “When a beneficiary of a prescription-drug plan goes to a pharmacy to fill a prescription, the pharmacy checks with a PBM to determine that person’s coverage and copayment information.”  (Ibid.)  “[T]he PBM [then] reimburses the pharmacy for the prescription, less the amount of the beneficiary’s copayment.”  (Ibid.)  “The prescription-drug plan, in turn, reimburses the PBM.”  (Ibid.)

Plaintiff sued Defendants for their alleged contributions to the opioid crisis.  Plaintiff claims Defendants created a public nuisance.  (See Complaint, ¶¶ 260-273.)

Defendants removed Plaintiff’s case to federal court, the federal court remanded it, and now the remand order is on appeal before the Ninth Circuit.

Here, Defendants move to stay Plaintiff’s case pending the appeal.

DISCUSSION

As a result of the appeal, Defendants claim Code of Civil Procedure section 916 applies and automatically stays Plaintiff’s case.  (See Motion, pp. 5-6; see also Reply, pp. 1-4.)

Plaintiff asserts that section 916 does not apply.  (See Opposition, pp. 2-4.)

The Court finds that Defendants fail to meet their burden.  Section 916 provides:

(a) Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.

(Cal. Code Civ. Proc. § 916, subd. (a).)  It is a California statute.  It applies to California appeals.  The plain language does not mention appeals in federal court (sections 917.1 to 917.9 and section 116.810 do not concern removal and remand orders), and Defendants fail to cite case law extending section 916’s reach to federal appeals.[1]

Since Defendants fail to show that section 916 extends to federal appeals, the Court does not need to determine whether upcoming proceedings in this Court will raise matters embraced in or affected by Defendants’ appeal.

Next, Defendants contend the Court should stay Plaintiff’s case under Griggs v. Provident Consumer Discount Co. (1982) 459 U.S. 56 and Coinbase, Inc. v. Bielski (2023) 599 U.S. 736 (“Coinbase”).  (See Motion, pp. 6-7; see also Reply, pp. 4-6.)

Plaintiff claims “Griggs and Coinbase are inapposite.”  (Opposition, p. 4, capitalizing and bolding deleted, underlining of case names added.)

The Court agrees with Plaintiff.  Griggs holds that, during a federal appeal, “the district court generally is divested of ‘jurisdiction’ over those aspects of the case involved in the appeal.”  (Goelz, et al., Rutter Group Practice Guide: Fed. Ninth Circuit Civ. Appellate Practice (The Rutter Group April 2024 Update) ¶ 3:406, emphasis added).  In Coinbase, the High Court applied the Griggs rule to the arbitration context.  Coinbase analyzes section 16(a) of the Federal Arbitration Act.  The decision instructs that court litigation must be stayed while an appeal of an order denying a motion to compel arbitration takes place.  (See Coinbase, supra, 599 U.S. at 738.)  But Coinbase is only applicable when a federal court denies an arbitration motion; it does not apply to decisions by state courts.  (See Knight, et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group December 2023 Update) ¶ 5:338.2.)  Indeed, “section 16 . . . is not binding on our state court proceedings[.]” (Muao v. Grosvenor Properties (2002) 99 Cal.App.4^th 1085, 1092 [analyzing section 16(a)(3)].) 

Next, Defendants assert that Plaintiff’s case should be stayed based on comity.  (See Motion, p. 8; cf. Opposition, pp. 6-7 [claiming comity is inapplicable].)

When two actions – one in federal court, and one in state court – cover the same subject matter, “the California court has the discretion but not the obligation to stay the state court action.”  (Caiafa Prof. Law Group v. State Farm Fire & Cas. Co. (1993) 15 Cal.App.4^th 800, 804.)  “In exercising its discretion, the court should consider the importance of discouraging multiple litigation designed solely to harass an adverse party, and of avoiding unseemly conflicts with the courts of other jurisdictions.”  (Ibid.)  “It should also consider whether the rights of the parties can best be determined by the court of the other jurisdiction because of the nature of the subject matter, the availability of witnesses, or the stage to which the proceedings in the other court have already advanced.”  (Ibid.)

On one hand, comity arguably does not fit the circumstances here.  There is only one action pending, not two.  The Ninth Circuit is only reviewing the remand issue.  A stay arguably is unnecessary given that discovery and the demurrer and motion to disqualify counsel do not touch on the remand issue.

On the other hand, a stay arguably should be granted to ensure that the right court presides over the case.  The federal court will be better suited to resolve Defendants’ federal defenses if the remand order gets reversed.  (See Motion, p. 8.)

Which brings the Court to judicial economy.  Comity or not, the essence of Defendants’ argument is that staying the case will preserve judicial and party resources.  Defendants contend any matters litigated in this Court will have to be relitigated in federal court if the Ninth Circuit ends up reversing.  (See Motion, pp. 8-10; see also Reply, pp. 6-7.)  Plaintiff, of course, disagrees.  (See Opposition, pp. 7-8.)  The Court believes this is Defendants’ strongest argument in favor of a full stay.  (See Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4^th 1484, 1489 [recognizing courts’ “inherent power to stay proceedings in the interests of justice and to promote judicial efficiency”].) 

On balance, though, the Court favors a shorter, more limited stay.  The Court intends to go forward with the demurrer because it does not involve the remand issue and could be dispositive.  The Court stays discovery until the demurrer is decided.