Walmart Suit Against DOJ Over Opioid ‘Mishandling’ Booted (1)

Feb. 5, 2021, 2:41 PM; Updated: Feb. 5, 2021, 9:53 PM

Walmart Inc.‘s lawsuit accusing the U.S. Department of Justice of scapegoating the chain to divert attention from its own failures to effectively address the public-health crisis over opioids has been kicked out of court, as the agency enjoys immunity from suit, a federal court in Texas said.

The world’s largest retailer failed to allege agency action sufficient to show the agency waived its right to sovereign immunity, the U.S. District Court for the Eastern District of Texas said. The court dismissed Walmart’s complaint.

The decision to toss the suit comes amid a row that has played out in two federal courts between the government and Walmart. The DOJ in December sued Walmart in the U.S. District Court for the District of Delaware, alleging the retailer unlawfully filled large numbers of opioid prescriptions via its national pharmacies.

“Walmart tried an end-around and was tackled. However, that certainly does not mean it has lost the ball game,” Booth Goodwin, a former U.S. attorney and now a partner at Goodwin & Goodwin LLP, said.

“I would imagine that most—if not all—of the same issues upon which Walmart sought declaratory relief will be litigated in the still-pending suit in the District of Delaware,” Goodwin said.

A Walmart spokesperson said the company will appeal the Texas decision to get “clarity on the roles and legal responsibilities of pharmacists and pharmacies in filling opioid prescriptions written by DEA approved doctors.”

“We brought this lawsuit because Walmart and our pharmacists are torn between demands from DEA on one side and federal health agencies and state regulators on the other, and patients are caught in the middle,” the spokesperson said. “Our pharmacists and patients deserve better than the current patchwork of inconsistent, conflicting and contradictory demands from federal and state regulators.”

‘Spectacular Failure’

Walmart filed its lawsuit to head off claims from the DOJ and Drug Enforcement Agency alleging the retailer’s pharmacies mishandled opioid prescriptions. The company said the government is “placing pharmacists and pharmacies in an untenable position by threatening to hold them liable for violating DOJ’s unwritten expectations.”

Those expectations “are directly at odds with state pharmacy and medical practice laws, the expert judgment of federal health agencies, and even DEA’s own public statements,” Walmart’s declaratory judgment complaint said.

The retail giant asked the court to enter a ruling clarifying pharmacies’ and pharmacists’ obligations under the Controlled Substances Act. But the agencies’ sovereign immunity bars the suit, the court said.

Walmart wanted to “choose the court that resolved the parties’ disagreements” over CSA interpretation “rather than allow the government to pick the forum,” David Noll, a Rutgers University law professor, said.

“The attempted forum shopping was a spectacular failure,” Noll said. “In holding that the government’s intention to file a civil case was not reviewable under the Administrative Procedure Act, the district court effectively ratified the government’s choice of forum, ensuring that the Delaware district court, not the Texas court, would resolve the dispute in the first instance.”

A federal government entity’s sovereign immunity for actions seeking equitable, nonmonetary relief normally is considered to be waived, the court said. But under U.S. Court of Appeals for the Fifth Circuit precedent, the plaintiff must identify some agency action that affects it adversely in a specific way—a standard the court said Walmart did not meet.

“The Fifth Circuit is probably the most anti-government court of appeals. By booting the case, the district court ensured that the Fifth Circuit would not have the chance to opine on Walmart’s claims about the meaning of the CSA,” Noll said.

Judge Sean D. Jordan wrote the opinion.

Jones Day; Siebman, Forrest, Burg & Smith LLP; and Wilmer Cutler Pickering Hale & Dorr represent Walmart. The U.S. Department of Justice represents DOJ and DEA.

The case is Walmart, Inc. v. U.S. Dep’t of Justice, 2021 BL 39942, E.D. Tex., No. 4:20-cv-817, 2/4/21.

(Updated with Walmart response, observer comments and additional reporting.)

To contact the reporters on this story: Mary Anne Pazanowski in Washington at mpazanowski@bloomberglaw.com; Ian Lopez in Washington at ilopez@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com; Alexis Kramer at akramer@bloomberglaw.com

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