CZ Services, Inc. v. Anthem Insurance Companies, Inc.

Background

This order resolved Anthem Insurance Companies, Inc.’s and Blue Cross and Blue Shield of Kansas City’s motions to dismiss the Second Amended Complaint filed by CZ Services, Inc., doing business as CareZone Pharmacy, and CareZone Pharmacy LLC. The motions challenged specific personal jurisdiction, meaning whether the defendants had sufficient connections with California for the court to hear claims against them.

The court had previously dismissed an earlier complaint for the same jurisdictional deficiency and allowed limited discovery directed to that issue. After discovery, CZ amended its allegations. The court concluded that the Second Amended Complaint still did not show that CZ’s claims arose out of or related to the defendants’ contacts or conduct in California.

The court also addressed the defendants’ decision to present non-jurisdictional arguments under Rule 12(b)(6), which concerns whether a complaint adequately states a claim. The court had expressly limited the post-discovery motions to the adequacy of the jurisdictional allegations. Because the defendants did not obtain permission to raise the additional grounds, the court struck those arguments from the docket and did not consider them.

Personal Jurisdiction Analysis

Specific personal jurisdiction generally requires both purposeful availment of the privilege of conducting activities in the forum state and a connection between the plaintiff’s claims and those forum contacts. The court found the first requirement satisfied. The Second Amended Complaint alleged that the defendants marketed insurance in California and covered Californians through their health insurance plans. The defendants did not dispute that they insured individuals in California and provided services there.

The court found the second requirement missing. CZ’s claims were based on Express Scripts, Inc.’s termination of CZ from Express Scripts’ networks. Express Scripts was described as a pharmaceutical benefits manager rather than a health insurance issuer. The court found that the allegations concerning the contract termination addressed conduct by Express Scripts outside California, not conduct by the named defendants in California.

CZ’s principal theory was that Express Scripts acted as the defendants’ agent. The court explained that an agency relationship requires the alleged principal to have the right to substantially control the agent’s activities. It accepted uncontested allegations as true and gave CZ the benefit of the doubt on disputed facts in the evidence, but still found that the Second Amended Complaint and jurisdictional-discovery materials did not show that Express Scripts was the defendants’ agent.

The court also found no evidence that the defendants ordered or required Express Scripts to terminate CZ from its networks in California. A contractual provision allowing an insurer to propose a pharmacy’s termination was not tied to CZ’s claims or to California. An email stating that Express Scripts advised Premera that it planned to terminate CZ also did not establish that Premera compelled or ratified Express Scripts’ decision.

Disposition

The court dismissed the Second Amended Complaint without prejudice under Federal Rule of Civil Procedure 12(b)(2), which addresses lack of personal jurisdiction. The court stated that CZ had received an ample opportunity, including jurisdictional discovery, to allege jurisdiction, so further amendment was not warranted. The case was closed. The court stated that CZ remained free to pursue its claims in Tennessee or another appropriate court, as circumstances warranted.