SHERMAN, Texas (Legal Newsline) - A federal judge in Texas dismissed Walmart’s lawsuit seeking a declaratory judgment that the Justice Department’s interpretation of federal drug laws is incorrect, saying he lacked jurisdiction because the government failed to waive its sovereign immunity from suit.
Walmart sued under the Declaratory Judgment Act, a law that allows plaintiffs to obtain a federal court ruling on a disputed question of law, in this case whether Walmart could be liable under the Controlled Substances Act for improperly filling “red flag” opioid prescriptions. The lawsuit was a preemptive shot after settlement negotiations with the government broke down. As expected, the Justice Dept. sued Walmart in December.
In a Feb. 4 decision, U.S. District Judge Sean D. Jordan agreed that federal law requires the government to waive its sovereign immunity before he could exercise jurisdiction over the case. Walmart argued a waiver wasn’t necessary because it was suing over the government’s pressure tactics to try to force it into a multibillion-dollar settlement of opioid claims.
The government also argued the court lacked jurisdiction because it hadn’t taken legal action yet, but the judge sidestepped that to focus on sovereign immunity. Congress passed an exception to that rule in 1976 by eliminating the sovereign immunity defense from certain suits involving the Administrative Procedure Act, which governs federal agencies, the judge noted.
Two federal circuits have interpreted that to include lawsuits seeking nonmonetary relief from federal agencies even if they haven’t taken action, but the Fifth Circuit isn’t one of them. In the Fifth Circuit, which includes Texas, plaintiffs must also show the agency has taken some action that directly affected them. It specifically rejects “challenges that seek wholesale improvement of an agency’s programs by court decree, rather than through Congress or the agency itself,” the judge wrote.
Walmart “cannot identify any precedent that stands for the proposition that a threat to file an enforcement action constitutes `agency action’ supporting a waiver of sovereign immunity,” the judge ruled.
Walmart said it will appeal the decision, which doesn’t mention the fact that the Justice Department filed its long-anticipated lawsuit on Dec. 22.
It called the decision “purely procedural” and said “we will appeal the court’s ruling to seek clarity on the roles and legal responsibilities of pharmacists and pharmacies in filling opioid prescriptions written by DEA approved doctors.”
In its lawsuit, the government accuses Walmart of ignoring “red flags” indicating prescriptions were at high risk of being diverted into the illegal drug market. The company complains that federal narcotics laws don’t define “red flags” and the legal theories behind the government’s case are merely agency opinions, not rules passed through the normal notice and comment process.