Opinion
MDL Docket No. 1290, Misc. No. 99mc0276.
April 25, 2005
MEMORANDUM OPINION
Pending before the Court is Plaintiffs' Joint Motion for Expedited Reconsideration of the Court's Prior Order Regarding Plaintiffs' Self-funded Plans or Alternatively, for Leave to Obtain Authorization Pursuant to Federal Rule of Civil Procedure 17(a) ("Motion") [# 762]. Having carefully considered the Motion, its opposition, Plaintiffs' reply, Defendants' sur-reply thereto, and the entire record herein, the Court will grant the Motion in part and deny the Motion in part.
I. LEGAL STANDARD
In this jurisdiction, a motion for reconsideration are to be treated as a motion to clarify or alter or amend judgment under Rule 59(e). Emory v. Sec'y of Navy, 819 F.2d 291, 293 (D.C. Cir. 1987). Such a motion need not be granted unless the Court finds there is (1) an intervening change in controlling law, (2) the availability of new evidence, or (3) the need to correct clear error or prevent manifest injustice. Anyanwutaku v. Moore, 151 F.3d 1053, 1057-58 (D.C. Cir. 1998). Plaintiffs ask the Court to reconsider its Order precluding Plaintiffs from presenting evidence of damages suffered by their self-funded plans. As the basis for their motion, Plaintiffs contend that the Court's Order works a manifest injustice upon these self-funded plans, as well as on Defendants and the efficient conduct of this litigation. Motion at 2. A motion for reconsideration should not be granted where the losing party is simply using the motion as a means of rearguing the same theory as expounded in the original motion.See Piper v. U.S. Dept. of Justice, et al., 312 F. Supp. 2d 17, 21 (D.D.C. 2004).
Plaintiffs also ask the Court, in the alternative, to allow Rule 17(a) ratification by their selffunded plan customers. Rule 17(a) requires every action to be prosecuted in the name of the real party in interest. Fed.R.Civ.P. 17(a). The remedial provision of the rule states:
"No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest." Id.
According to the Advisory Committee Notes, this rule "is intended to prevent forfeiture when determination of the proper party to sue is difficult or when an understandable mistake has been made." Fed.R.Civ.P. 17(a), Advisory Committee Notes, 1966 Amendment.
II. DISCUSSION
A. Motion to Reconsider
Plaintiffs first ask the Court to reconsider its decision precluding evidence regarding Plaintiffs' claims for damages based on the reimbursements paid by Plaintiffs' self-funded customers, arguing that reconsideration is warranted to prevent manifest injustice. Plaintiffs assert that the Court's Order works an injustice on the self-funded plans, on Defendants, and on the efficient conduct of this litigation. Motion at 2. Plaintiffs do not offer a single citation to any legal authority in support of this contention. Instead, Plaintiffs merely recite identical arguments to those made in their opposition to Defendants' motion in limine on this issue, arguments that this Court has already carefully considered and rejected. Despite Plaintiffs' altruistic concerns for the interests of their adversaries and self-funded customers, they have not given the Court any reason to believe that the fallout from the Order will rise to the level of manifest injustice. Plaintiffs fail to meet the exacting standard required for a motion to reconsider to succeed. Accordingly, the Court will deny that part of the Motion.
Plaintiffs' decry the Court's decision on this issue as a "different" and "minority" view. Reply at 5. Plaintiffs lament that "no court to date in any of the drug pricing litigations to date (including Augmentin, BuSpar, Coumadin, Cardizem CD, Hytrin, Lupron, Paxil, Synthroid, Taxol) has held that TPA's do not have the authority to pursue claims on behalf of their selffunded plans." Motion at 4 (emphasis in original). Critically, Plaintiffs fail to point to any court in any of the drug pricing litigations to date that has held that TPAs do have the authority to pursue claims on behalf of their self-funded plans. In light of this convenient omission, the Court was and is not persuaded.
B. Rule 17(a) Ratification
Plaintiffs next ask the Court for leave pursuant to Rule 17(a) to obtain authorization from their self-funded customers to pursue claims on their behalf. Defendants first argue that Rule 17(a) ratification is not appropriate here because the rule is intended to rectify situations where it has been determined that the party bringing the suit is not the real party in interest, and Plaintiffs are real parties in interest in this case. While clearly Plaintiffs are the real parties in interest in this case with respect to their own claims, they are not the real party in interest with respect to the claims for damages suffered by their self-funded customers. The Court's Order at issue effectively dismissed those claims. Thus, the application of the remedial provision of Rule 17(a) is appropriate here if the requirements of the rule are otherwise met.
Under the Rule, the Court should liberally allow ratification if an understandable mistake was made as to Plaintiffs' authority to sue on behalf of their self-funded customers. See Fed.R.Civ.P. 17(a), Advisory Committee Notes; Intown Props. Mgmt., Inc. v. Wheaton Van Lines, Inc., 271 F.3d 164, 171 (4th Cir. 2001); U.S. v. CMA, Inc., 890 F.2d 1070, 1074-75 (9th Cir. 1989); Lans v. Gateway 2000, Inc., 84 F. Supp. 2d 112, 120 (D.D.C. 1999). Plaintiffs argue that they made an understandable mistake in pursuing these claims under the belief that the contracts they had with their self-funded customers provided them the legal authority to do so. Plaintiffs represent that they have regularly pursued claims on behalf of those customers without challenge, and further that they have always viewed it to be their contractual and legal obligation to pursue these claims at their discretion. Indeed, the issue appears to be one of first impression. Additionally, Defendants did not object when Plaintiffs opted the plans out of the class settlement in this case. Instead, formal challenge to Plaintiffs' authority to act on their behalf in this case did not come until Defendants' motion in limine.
Defendants contend that Plaintiffs' was not an honest or understandable mistake, because Plaintiffs have always known that their self-funded customers had their own separate ability to bring claims against Defendants and several have done so receiving payment for their claims in the class settlement. Defendants also argue that the heated litigation surrounding the discovery of the self-funded contracts reveals that Plaintiffs were aware that their authority was suspect. Finally, Plaintiffs were put on notice back during their involvement in the Cardizem antitrust litigation that they did not have the authority to act on behalf of their self-funded customers. See In re Cardizem CD Antitrust Litigation, Law. No. 99-md-1278, MDL No. 1278 (E.D. Mich. June 27, 2003) (Edmunds, J.). In that case, the court required Plaintiffs to obtain ratifications from their customers before allowing Plaintiffs to opt the plans out of the litigation.
While the reasonableness of Plaintiffs' mistake is a close question, the liberal application of Rule 17(a) favored by courts tips the balance toward allowing ratification here. There is no evidence that Plaintiffs' failure to earlier join their self-funded customers or obtain authorization to sue on their behalf was deliberate or tactical, nor is there evidence that Plaintiffs undertook these claims in bad faith. See Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 20-21 (2nd Cir. 1997) (finding "no good reason why Rule 17(a) should not have been applied" to allow substitution where plaintiff, having mistakenly relied on ineffective assignment of its shareholders' claims, asserted those claims in complaint, and mistake was not deliberate, tactical, or made in bad faith). Where an honest mistake has been made in choosing the party in whose name the action is to be filed, courts have often applied the Rule 17(a) remedy even late in the course of litigation.Intown, 271 F.3d at 170 (citing cases). Moreover, Defendants would not be prejudiced by the application of Rule 17(a) here. The claims of the self-funded customers were sufficiently asserted in the complaints, and Plaintiffs have always been clear that they were pursuing claims on behalf of their self-funded plans. While the requested ratification indeed comes on the eve of trial, no additional discovery is needed, and Defendants are well aware of the nature of the claims and the damages sought. The addition of the self-funded customers would significantly change the amount of damages claimed, but would not change the substance of the issues to be litigated at trial. The Court will grant Plaintiffs leave to obtain authorization from their self-funded customers.
The final issue the Court must address is whether Plaintiffs' proposed procedure for obtaining authorization is sufficient. Plaintiffs seek to use "negative option" letters for ratification. Plaintiffs will send letters indicating to their self-funded customers that, unless they opt out of the case by contacting a designated individual by a date certain to withdraw authority to pursue the claims, Plaintiffs will proceed to do so with the full authority of the plans, and the plans will be bound by the result of the litigation. A proper ratification under Rule 17(a) requires that the ratifying party (1) authorize continuation of the action and (2) agree to be bound by the result. Icon Group, Inc. v. Mahogany Run Development Corp., 829 F.2d 473, 477 (3rd Cir. 1987) (citing 6 C. Wright A. Miller, Federal Practice and Procedure § 1555, at 709 (1971 ed.)). A similar procedure was approved by the court in Cardizem to obtain authorization for Plaintiffs to opt their self-funded plans out of the class settlement in that case. Defendants do not appear to contest the adequacy of the procedure Plaintiffs have laid out for authorization. The Court will allow Plaintiffs to use this procedure here.
III. CONCLUSION
For the foregoing reasons, the Court will grant the Motion in part and deny the Motion in part. Accordingly, Plaintiffs' motion for reconsideration is denied. Plaintiff's request for leave to obtain authorization to pursue the claims of their self-funded customers is granted. An appropriate Order will accompany this Memorandum Opinion.