Drug stores: W.Va. AG's case is a class action

John O'Brien Jan. 11, 2011, 1:27pm


RICHMOND, Va. (Legal Newsline) - A group of pharmacies is telling a federal appeals court that West Virginia Attorney General Darrell McGraw is acting like a class action lawyer.

Six prescription drug retailers are making that argument in their appeal of a district court decision that remanded McGraw's lawsuit against them to Boone County Circuit Court. They argue that because McGraw has basically filed a class action suit, then it should be heard in federal court.

Those stores appealed the district court's decision to the U.S. Court of Appeals for the Fourth Circuit in October and submitted their opening brief on Dec. 28. McGraw's lawsuit alleges Target, Kroger, CVS, Walgreen, Wal-Mart and Kmart did not pass along savings from filling prescriptions with generic drugs on to consumers.

"(O)n (the Class Action Fairness Act's) plain terms, this action satisfies CAFA's jurisdictional requirements," the brief says.

"The AG's allegations make abundantly clear that more than $5 million and the interests of more than 100 persons are at issue. If the rightful interests of the West Virginia consumers on whose behalf the AG has brought suit are recognized, there also is undeniably minimal diversity between at least some plaintiffs (who are West Virginia citizens) and all defendants (as none of the defendants reside in or is a citizen of West Virginia."

The brief adds that any consumer who was allegedly overcharged is a real party in interest to the case. McGraw is seeking recovery under the West Virginia Consumer Credit and Protection Act.

McGraw successfully argued to the lower court that he brought the action in his parens patriae capacity. That term refers to the state's power to intervene against a wrongdoer.

The pharmacies say McGraw's role, under the WVCCPA, is limited to a representative for the plaintiff class.

"It permits the AG... to sue solely as the agent or representative for overcharged consumers," the brief says. "It requires that any 'excess charges' recovered by the AG 'shall be refunded' to the aggrieved consumers.

"It subordinates any claim brought by the AG to any claim brought by a consumer in his or her own right. And, finally, it binds the AG to any final decisions as to that consumer. The AG thus stands in the shoes of the aggrieved consumer, inasmuch as none of these statutory features would be necessary if the AG were acting on behalf of the State or its public as a whole."

McGraw hired two private firms - Bailey & Glasser and DiTrapano Barrett & DiPiero - to pursue the case, and another one against Rite Aid. The two firms have contributed more than $60,000 to McGraw's campaign fund over the years, including $11,800 for his 2008 race against Republican Dan Greear.

Bailey & Glasser brought similar lawsuits in Michigan and Minnesota. The Michigan suits were dismissed by a state judge because the only specific pricing information was obtained by a West Virginia whistleblower who worked at Kroger.

The Minnesota lawsuit, brought on behalf of unions that provide health care for their members, was initially dismissed in November 2009 by U.S. District Judge James Rosenbaum, who had harsh words for the plaintiffs attorneys.

Rosenbaum was peeved that the complaint, filed against 13 defendants, only contained specific pricing information about two of them.

"(T)his Complaint utterly fails to state a cause of action on any basis. There are no, none, factual allegations touching any defendant other than CVS and Walgreen's," Rosenbaum said Nov. 20, 2009.

"There being no facts from which a fact finder could infer any liability concerning (the other defendants), and you asked me to sustain a complaint based upon that. It's not only laughable, it's absolutely reprehensible."

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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