New York City Transit Authority v. Express Scripts, Inc.

Background

NYCTA sued its former pharmacy benefits manager, Express Scripts, for breach of contract. In an earlier summary-judgment decision, the court granted in part and denied in part Express Scripts’s motion. Among other things, the court rejected Express Scripts’s request for summary judgment on NYCTA’s compound-drug claims for compensatory damages, although it found that NYCTA had failed to comply with some disclosure requirements under Rule 26 of the Federal Rules of Civil Procedure.

The earlier decision also treated summary charts prepared by NYCTA consultant Vincent Kozlowski as admissible under Rule 1006 of the Federal Rules of Evidence. Express Scripts then obtained limited additional discovery concerning Kozlowski and moved for reconsideration of the decision concerning compensatory damages.

Damages Charts

Express Scripts argued that the charts were inadmissible because Kozlowski could not establish a sufficient connection between his calculations and admissible underlying evidence. The court agreed. Summary evidence may be used only when the underlying documents are admissible and the proponent provides enough foundation testimony to show how the summary was derived from those documents.

Kozlowski’s earlier declaration stated that he created the charts from raw claims data provided by Express Scripts. During his deposition, however, he testified that the dataset he used came from Caribou, a separate company providing auditing services for Aon. He had been told that the dataset was prepared from Express Scripts’s files, but he had not verified that and had no personal knowledge of how Caribou created it. The court concluded that Kozlowski could not provide the required foundation connecting the charts to Express Scripts’s raw claims data.

NYCTA submitted a new declaration from Valerie Ridgway to address that problem. The court declined to consider the declaration because Local Civil Rule 6.3 forbids affidavits on reconsideration motions unless the court permits them, and NYCTA had not requested or received permission. The court also stated that the declaration would not cure the defect because it indicated that Caribou employees had altered the underlying data and gave an inadequate explanation of how they had done so. The court therefore concluded that the Kozlowski Charts, at least in their current form, were inadmissible.

Reconsideration of Summary Judgment

Despite excluding the charts, the court denied Express Scripts’s request to reconsider the earlier summary-judgment ruling. Under the governing standards, reconsideration is narrowly limited to circumstances such as an intervening change in controlling law, new evidence, or a clear error or manifest injustice.

The court explained that uncertainty about the amount of contract damages does not necessarily defeat a claim when the plaintiff has evidence creating a genuine dispute about whether damages exist. Express Scripts did not dispute that NYCTA had evidence sufficient to create such a dispute. The court identified several potentially relevant sources, including a Pharmacy Claims Dataset created by Caribou using Express Scripts data, Express Scripts’s raw claims data produced in discovery, and an Aon report concerning compound-drug spending.

The court also noted that Express Scripts did not dispute that NYCTA could recover nominal damages if it proved a breach. Because the record contained evidence that could support a reasonable estimate of damages or at least nominal damages, the court held that summary judgment on the compound-drug damages claims was not warranted. Express Scripts’s additional arguments concerning expert testimony and damages calculations for non-compound-drug claims were denied because they were newly raised and were not proper grounds for reconsideration.

Sanctions and Disposition

The court nevertheless found that NYCTA’s repeated failures to comply with its discovery obligations warranted a sanction. Instead of precluding the charts on that basis, the court ordered NYCTA to reimburse Express Scripts for the reasonable attorneys’ fees and costs incurred in conducting additional discovery after the earlier summary-judgment decision and in bringing the reconsideration motion.

In sum, the court denied Express Scripts’s motion for reconsideration. It ordered NYCTA to pay the specified reasonable fees and costs, directed the parties to meet and confer about the amount, and set procedures for an accounting if they could not agree. The court also directed the parties to submit pretrial materials and confer about possible settlement and further mediation. The opinion did not state a fee amount.