Plumbers Welfare Fund, Local 130 v. CVS Health Corporation

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
SHEET METAL WORKERS LOCAL NO. 20 	)
WELFARE AND BENEFIT FUND, and 	)
INDIANA CARPENTERS WELFARE FUND, 	)
on behalf of themselves and all 	) 	C.A. No. 16-46 WES
others similarly situated, 	)
)
Plaintiffs, 	)
)
v. 	)
)
CVS PHARMACY, INC., 	)
)
Defendant. 	)
___________________________________)
)
PLUMBERS WELFARE FUND, LOCAL 130, 	)
U.A., on behalf of itself and all 	)
others similarly situated, 	)
) 	C.A. No. 16-447 WES
Plaintiffs, 	)
)
v. 	)
)
CVS PHARMACY, INC., 	)
)
Defendant. 	)
)
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Presently before the Court is Plaintiffs’ Motion for Leave to
File 	First 	Amended 	Complaint 	(ECF 	No. 	56), 	in 	which 	they 	ask
permission 	to 	update 	their 	story 	about 	alleged 	fraud 	spearheaded
by 	Defendant 	CVS 	Pharmacy, 	Inc., 	(“CVS”). 	In 	particular,
Plaintiffs 	would 	like 	to 	revise 	their 	complaint 	to 	comport 	with
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information 	they 	learned 	in 	discovery, 	namely, 	that 	Pharmacy
Benefit Managers (“PBMs”), who facilitated generic-drug purchases
between 	Plaintiffs 	and 	CVS, 	were 	allegedly 	aware 	of 	and 	abetted
CVS’s fraud. But not only do Plaintiffs seek to amend their factual
allegations; they also hope to add two claims under the Racketeer
Influence 	and 	Corrupt 	Organizations 	Act 	(“RICO”), 	18 	U.S.C. 	§§
1961-1968. 	For 	the 	reasons 	that 	follow, 	Plaintiffs’ 	Motion 	is
GRANTED.
I. 	Background1
Alleging negligent misrepresentation, unjust enrichment, and
violations of state-consumer-protection acts, Plaintiffs had it in
their 	original 	complaint 	that 	CVS 	overcharged 	them 	by 	collecting
more 	for 	generic 	drugs 	than 	it 	was 	allowed 	under 	the 	National
Council 	for 	Prescription 	Drug 	Program 	(“NCPDP”). 	See 	Sheet 	Metal
Workers Local No. 20 Welfare and Benefit Fund v. CVS Health Corp.,
221 F. Supp. 3d 227, 229–31 (D.R.I. 2016) (denying CVS’s motion to
dismiss). 	According 	to 	this 	complaint, 	a 	key 	component 	of 	CVS’s
fraud 	was 	its 	Health 	Savings 	Pass 	(“HSP”) 	program, 	which 	CVS
developed to compete with big-box retailers (e.g., Wal-Mart, Inc.)
1 	The 	following 	facts 	are 	those 	well-pleaded 	in 	the
Plaintiffs’ Proposed First Amended Complaint (ECF No. 58-1), taken
in 	the 	light 	most 	favorable 	to 	and 	drawing 	all 	reasonable
inferences in favor of Plaintiffs. Gray v. Evercore Restructuring
L.L.C., 544 F.3d 320, 324 (1st Cir. 2008).
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who had recently slashed prices on certain generic drugs. See id.
at 229-30.
Instituted November 2008 and discontinued February 2016, the
HSP program allowed individual cash-paying CVS customers to access
discounted 	prices 	by 	paying 	an 	annual 	membership 	fee. 	(Pls.’
Proposed First Am. Compl. (“PAC”) 3, ECF No. 58-1). Though nominal,
the 	fee 	paid 	substantial 	dividends. 	CVS 	saved 	large 	sums 	by
purposefully 	structuring 	the 	HSP 	program 	to 	prevent 	Plaintiffs,
and 	others 	similarly 	situated, 	from 	accessing 	the 	program’s
discounts 	while 	remaining 	(or 	so 	it 	thought) 	in 	compliance 	with
NCPDP’s 	requirement 	that 	CVS 	charge 	Plaintiffs 	no 	more 	than 	the
general 	public, 	that 	is, 	no 	more 	than 	the 	“Usual 	and 	Customary”
(“U&C”) 	price 	for 	drugs. 	(Id. 	at 	1-4, 	43.) 	The 	thought 	was 	that
because 	the 	HSP 	price 	was 	not 	available 	to 	cash 	customers, 	but
only 	to 	HSP 	members, 	CVS 	was 	not 	required 	to 	offer 	that 	price 	to
Plaintiffs, but could instead report the higher price paid by non-
HSP-member 	cash 	customers 	as 	the 	U&C 	price.2 	(Id. 	at 	25.) 	This
allowed CVS to retain cash customers without passing on the price
cut to purchasers like Plaintiffs. (Id. at 20-24.)
Since 	filing 	its 	original 	complaint, 	Plaintiffs 	claim
discovery 	has 	revealed 	a 	more 	complex 	scheme 	whereby 	CVS 	did 	not
2 Plaintiffs 	pay 	the 	lowest 	of 	several 	prices 	CVS 	reports.
The 	U&C 	price 	is 	usually 	the 	highest 	of 	the 	reported 	prices, 	but
is nonetheless reported to ensure Plaintiffs pay no more than cash
customers. (Id. at 15.)
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act alone, but rather enlisted the help of various other entities
to 	develop 	and 	conceal 	the 	gambit 	described 	above 	to 	bilk
Plaintiffs and others out of billions of dollars. (Id. at 31-43.)
One 	of 	these 	entities 	was 	Caremark, 	LLC, 	(“Caremark”). 	Caremark
helped 	CVS 	design 	the 	HSP 	program, 	and 	in 	particular, 	developed
the 	nominal-membership-fee 	feature 	as 	a 	way 	to 	compete 	with 	the
big-box stores for cash customers without offering similar savings
to Plaintiffs. (Id. at 20-24). Caremark also administered the HSP
program from its inception in 2008 to 2013, when Medical Security
Card 	Company 	(“ScriptSave”) 	took 	it 	over. 	(Id. 	at 	26-27.) 	Both
Caremark and ScriptSave recognized that the program allowed CVS to
“‘protect’ 	loyalty 	member 	price[s] 	from 	third 	parties.” 	(Id. 	at
29.) 	But, 	anticipating 	that 	these 	third 	parties 	would 	consider
such protection a bug, not a feature, of the program, they worked
with CVS to keep it a secret. (Id. at 31.)
Plaintiffs 	also 	allege 	that 	four 	of 	the 	country’s 	largest
PBMs 	– 	Caremark, 	Express 	Scripts, 	Inc., 	OptumRx, 	Inc., 	and
MedImpact 	Healthcare 	Systems, 	Inc. 	– 	were 	in 	on 	the 	scheme, 	too.
(Id. at 31-43.) PBMs contract with health plans like Plaintiffs to
reimburse 	pharmacies 	like 	CVS 	when 	a 	plan’s 	members 	fill 	their
prescriptions. (Id. at 4-5, 10.) PBMs ostensibly work on behalf of
their 	health-plan 	clients 	to, 	among 	other 	things, 	negotiate 	low
pharmacy drug prices. (Id.) The interests of PBMs and health plans
are 	not 	perfectly 	aligned, 	however. 	(See 	id. 	at 	15-17.) 	Health
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plans want cheap drugs; PBMs want the difference between what they
pay 	pharmacies 	for 	drugs 	and 	what 	they 	charge 	health 	plans 	for
those drugs to be as large as possible. (Id.) In other words, the
difference 	between 	what 	PBMs 	pay 	and 	what 	they 	charge 	is 	their
gain, but the health plans’ loss. (See id.)
The 	PBMs 	allegedly 	increased 	this 	spread 	by 	deliberately
hiding 	from 	health 	plans 	the 	fact 	that 	CVS 	was 	not 	reporting 	its
HSP 	price 	as 	its 	U&C 	price. 	(Id. 	at 	31.) 	Each 	PBM 	developed 	an
internal 	policy 	interpreting 	definitions 	of 	U&C 	price 	in 	their
respective contracts with CVS as excluding HSP prices. (Id. at 31-
43.) 	Plaintiffs 	allege 	that 	this 	was 	no 	coincidence 	– 	that 	CVS
prompted 	the 	PBMs 	to 	keep 	the 	ruse 	a 	secret, 	and 	that 	each 	PBM
knew 	the 	others 	had 	agreed 	to 	do 	so. 	(Id.) 	This 	assurance 	was
paramount 	to 	the 	scheme, 	for 	if 	any 	one 	PBM 	had 	confessed, 	the
health 	plans 	would 	have 	put 	a 	stop 	to 	it, 	insisting 	they 	pay 	no
more than CVS’s cash customers in accordance with their contracts
with 	the 	PBMs. 	(Id. 	at 	45.) 	Indeed, 	Plaintiffs 	say 	that, 	in 	a
competitive 	market, 	such 	insistence 	would 	have 	been 	unnecessary,
as one or more PBMs would have adopted HSP prices sua sponte in an
effort to attract plan business. (Id. at 51-57.)
According 	to 	Plaintiffs, 	fraud 	operated 	here 	on 	more 	than 	a
wink and a nod. Plaintiffs allege that it “was orchestrated out of
the 	corporate 	headquarters 	of 	CVS, 	Caremark, 	each 	remaining 	PBM,
and 	ScriptSave” 	and 	“required 	those 	headquarters 	to 	communicate
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directly 	and 	frequently 	by 	U.S. 	Mail 	and 	interstate 	wire
facilities.” 	(Id. 	at 	60-61.) 	Plaintiffs 	aver 	that 	these 	parties
“share[d] 	information 	regarding 	various 	cash 	discount 	programs,
the structure of those programs, and whether they [were] reporting
those prices as U&C prices.” (Id. at 66.) For example, in a back-
and-forth 	between 	CVS 	executives 	and 	executives 	at 	Indiana
Carpenters Welfare Fund’s PBM, Medco Health Solutions, Inc., (now
owned 	by 	Express 	Scripts), 	Medco 	assured 	CVS 	that 	it 	would
interpret its definition of U&C price – “the lowest net cash price
a 	cash 	. 	. 	. 	customer 	would 	have 	paid 	. 	. 	. 	inclusive 	of 	all
applicable discounts” – as excluding CVS’s HSP price, even though
Medco 	had 	previously 	determined 	that 	it 	would 	consider 	Wal-Mart,
Inc.,’s 	discounted 	price 	for 	generics 	as 	its 	U&C 	price. 	(Id. 	at
33-38.) 	Unsuccessful 	in 	its 	attempt 	to 	have 	Medco 	modify 	its
definition of U&C price to explicitly exclude discounts associated
with “card programs such as CVS’ Health Savings Pass,” CVS settled
for 	Medco’s 	sotto 	voce 	amendment. 	(Id.) 	CVS 	then 	notified 	an
ostensible competitor of Medco’s – Caremark – of Medco’s decision
when 	a 	vice 	president 	at 	CVS, 	Tina 	Egan, 	forwarded 	an 	email 	to
Caremark’s 	senior 	legal 	counsel, 	Roderick 	Bergin, 	containing
Medco’s 	discreet 	capitulation. 	(Id. 	at 	37 	(“Ms. 	Egan 	forwarded
Medco’s response to Roderick Bergin . . . as an ‘FYI.’”).)
Plaintiffs 	believe 	that 	the 	foregoing, 	if 	proved, 	supports
the 	two 	RICO 	claims 	in 	their 	PAC. 	In 	the 	first 	of 	these 	claims,
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Plaintiffs 	allege 	that 	CVS 	and 	Caremark 	shepherded 	a 	RICO
enterprise 	that 	included 	the 	aforementioned 	PBMs 	and 	ScriptSave,
all 	of 	whom 	Plaintiffs 	want 	as 	defendants. 	(Id. 	at 	51-64.) 	This
enterprise worked together to defraud Plaintiffs by disguising the
fact 	that 	CVS 	failed 	to 	report 	HSP 	prices 	as 	its 	U&C 	prices 	for
certain 	generic 	drugs. 	(Id.) 	The 	second 	claim 	is 	similar 	to 	the
first, 	except 	that 	it 	splits 	the 	enterprise 	alleged 	in 	the 	first
claim 	into 	three, 	each 	including 	CVS, 	Caremark, 	ScriptSave, 	and
one of the three other PBMs. (Id. at 64-78.) Plaintiffs also have
a 	standalone 	fraud 	claim 	in 	their 	PAC, 	which 	relies 	on 	the 	same
alleged 	fraud 	underlying 	their 	RICO 	claims. 	(Id. 	at 	82-83.) 	The
remaining claims – negligent misrepresentation, unjust enrichment,
and 	violations 	of 	state-consumer-protection 	acts 	– 	are 	holdovers
from the original complaint. See Sheet Metal Workers, 221 F. Supp.
3d at 230.
II. 	Discussion
A. 	Legal Standard
The 	parties 	disagree 	as 	to 	whether 	Federal 	Rule 	of 	Civil
Procedure 15(a) or 16(b) supplies the standard by which the Court
must evaluate Plaintiffs’ Motion. But, in fact, both apply.
The 	First 	Circuit 	has 	made 	plain 	that 	where, 	as 	here, 	a
plaintiff seeks to amend its complaint after the deadline for doing
so 	set 	by 	the 	district 	court’s 	scheduling 	order 	has 	passed, 	Rule
16(b)’s 	“good 	cause” 	standard 	applies. 	O’Connell 	v. 	Hyatt 	Hotels
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of 	P.R., 	357 	F.3d 	152, 	154 	(1st 	Cir. 	2004).3 	This 	standard 	–
“[u]nlike 	Rule 	15(a)'s 	‘freely 	given’ 	standard, 	which 	focuses
mostly 	on 	the 	bad 	faith 	of 	the 	moving 	party 	and 	the 	prejudice 	to
the 	opposing 	party” 	– 	“emphasizes 	the 	diligence 	of 	the 	party
seeking the amendment.” Id. at 155. Under Rule 16(b), “[p]rejudice
to 	the 	opposing 	party 	remains 	relevant 	but 	is 	not 	the 	dominant
criterion.” Id.
If 	a 	plaintiff 	makes 	it 	over 	the 	hurdle 	set 	by 	Rule 	16(b),
the district court must then evaluate a contested motion to amend
under 	Rule 	15(a)’s 	“freely 	give[n]” 	standard. 	See 	Leary 	v.
Daeschner, 349 F.3d 888, 909 (6th Cir. 2006) (“Once the scheduling
order’s 	deadline 	passes, 	a 	plaintiff 	first 	must 	show 	good 	cause
under Rule 16(b) for failure earlier to seek leave to amend before
a 	court 	will 	consider 	whether 	amendment 	is 	proper 	under 	Rule
15(a).”); 	6A 	Charles 	Alan 	Wright 	& 	Arthur 	R. 	Miller, 	Federal
Practice and Procedure § 1522.2 (3d ed. 1998) (same). That is, the
district court must ask whether a plaintiff’s amendment would cause
undue delay, was brought in bad faith, or with a dilatory motive,
or if the amendment would be futile. Grant v. News Grp. Bos., Inc.,
55 F.3d 1, 5 (1st Cir. 1995).
3 Due 	seemingly 	to 	scrivener’s 	error, 	the 	deadline 	by 	which
to amend the pleadings was not included in this case’s scheduling
order. Nevertheless, both parties agree the deadline was March 3,
2017. 	(See 	Def.’s 	Sur-Reply 	in 	Opp’n 	to 	Pls.’ 	Mot. 	for 	Leave 	to
File First Am. Compl. 2, ECF No. 65.)
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Particularly 	salient 	at 	the 	moment 	are 	questions 	of 	undue
delay4 and 	futility. 	Undue 	delay, 	on 	its 	own, 	can 	be 	a 	basis 	for
denying 	amendment 	in 	the 	First 	Circuit. 	Acosta–Mestre 	v. 	Hilton
Int’l 	of 	P.R., 	Inc., 	156 	F.3d 	49, 	52 	(1st 	Cir. 	1998). 	But 	see
Wright & Miller, supra, at § 1488 (“In most cases, delay alone is
not 	a 	sufficient 	reason 	for 	denying 	leave.”). 	There 	is 	no 	delay
that 	is 	per 	se 	undue. 	Wright 	& 	Miller, 	supra, 	at 	§ 	1488 	(“Quite
appropriately 	the 	courts 	have 	not 	imposed 	any 	arbitrary 	timing
restrictions 	on 	requests 	for 	leave 	to 	amend 	and 	permission 	has
been 	granted 	under 	Rule 	15(a) 	at 	various 	stages 	of 	the
litigation.”). Rather, a district court mulling a motion to amend
in 	a 	particular 	case 	must 	consider 	any 	alleged 	delay 	with 	that
case’s 	specific 	history 	in 	mind. 	Id. 	(“The 	policy 	of 	allowing
amendments to be made at any time during the litigation is sound.
It would be unreasonable to restrict a party’s ability to amend to
a particular stage of the action inasmuch as the need to amend may
not 	appear 	until 	after 	discovery 	has 	been 	completed 	or 	testimony
4 Whether the movant has delayed unduly its amendment request
is relevant to – even sometimes determinative of – whether it has
been diligent under Rule 16(b). See, e.g., Compania Embotelladora
Del Pacifico v. Pepsi Cola Co., 607 F. Supp. 2d 600, 602 (S.D.N.Y.
2009) 	(“[C]ourts 	have 	found 	good 	cause 	to 	be 	lacking 	[under 	Rule
16(b)] where, as here, the moving party had knowledge of the facts
and 	circumstances 	in 	the 	case 	for 	a 	period 	of 	several 	years 	and
could 	have 	made 	their 	motion 	within 	the 	specified 	time 	period.”
(quotation 	marks 	omitted)); 	Wright 	& 	Miller, 	supra, 	at 	§ 	1522.2
(“[R]elief 	[under 	Rule 	16(b)] 	may 	be 	granted 	if 	the 	court 	finds
that 	the 	movant 	has 	not 	unduly 	delayed 	the 	action 	and 	that 	the
opponent will not be prejudiced by the modification.”).
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has 	been 	taken 	at 	trial.”). 	However, 	the 	First 	Circuit 	has 	not
hesitated 	to 	affirm 	the 	denial 	of 	an 	amendment 	when 	more 	than 	a
year 	elapses 	between 	filing 	the 	initial 	complaint 	and 	the 	motion
to 	amend 	it. 	See, 	e.g., 	Badillo–Santiago 	v. 	Naveira–Merly, 	378
F.3d 1, 7–8 (1st Cir. 2004) (thirteen-to-fourteen months); Acosta–
Mestre, 	156 	F.3d 	at 	52 	(fifteen 	months); 	Grant, 	55 	F.3d 	at 	6
(fourteen months).
Whether amendment would be futile “is gauged by reference to
the liberal criteria of Federal Rule of Civil Procedure 12(b)(6).”
Hatch 	v. 	Dep’t 	for 	Children, 	Youth, 	and 	Their 	Families, 	274 	F.3d
12, 19 (1st Cir. 2001) (noting, however, that if a plaintiff waits
until after the close of discovery and the docketing of a summary
judgment motion, then amendment is “properly classified as futile
unless 	the 	allegations 	of 	the 	proposed 	amended 	complaint 	are
supported by substantial evidence”). In other words, amendment is
futile 	when 	the 	proposed 	complaint 	does 	not 	“contain 	sufficient
factual matter to state a claim to relief that is plausible on its
face.” 	Saldivar 	v. 	Racine, 	818 	F.3d 	14, 	18 	(1st 	Cir. 	2016)
(alteration 	and 	quotation 	marks 	omitted). 	A 	plausible 	claim 	of
relief 	is 	one 	that 	“support[s] 	the 	reasonable 	inference 	that 	the
defendant 	is 	liable,” 	not 	just 	“a 	sheer 	possibility 	that 	a
defendant has acted unlawfully.” Id. (quotation marks omitted). In
making 	this 	determination, 	the 	Court 	regards 	“the 	well-pleaded
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facts in the light most favorable to the non-moving party, drawing
all reasonable inferences in its favor.” Gray, 544 F.3d at 324.
B. 	Rule 16(b)
Defendant argues that Plaintiffs have been less than diligent
in 	prosecuting 	their 	case. 	(Def.’s 	Sur-Reply 	in 	Opp’n 	to 	Pls.’
Mot. for Leave to File First Am. Compl. 3, ECF No. 65.) Defendant
notes 	that 	a 	mere 	thirty 	pages 	of 	discovery 	– 	sworn 	declarations
from the PBMs indicating they knew CVS was not reporting HSP prices
– 	form 	the 	basis 	of 	Plaintiffs’ 	PAC. 	(Id. 	at 	1, 	3) 	Moreover,
Plaintiffs 	possessed 	the 	PBMs’ 	declarations 	as 	early 	as 	December
23, 2016, over five months before Plaintiffs submitted their Motion
to Amend on June 5, 2017. (Id.) Therefore, Defendant contends, “If
they 	had 	acted 	diligently, 	Plaintiffs 	easily 	could 	have 	reviewed
those documents and moved to amend the complaint by March 3, 2017,
the agreed deadline.” (Id. at 1).
The 	closest 	case 	Defendant 	finds 	to 	these 	facts 	is 	Steir 	v.
Girl 	Scouts 	of 	the 	USA, 	383 	F.3d 	7 	(1st 	Cir. 	2004). 	In 	Steir,
plaintiff moved to amend her complaint nine months after defendant
tacitly 	conceded 	facts 	relevant 	to 	the 	proposed 	amendment, 	three
months after the defendant openly conceded such facts, and a week
after 	discovery 	had 	closed. 	Steir, 	383 	F.3d 	at 	13-14.
Notwithstanding 	plaintiff’s 	“somnolence,” 	the 	First 	Circuit
considered 	the 	question 	whether 	plaintiff 	met 	Rule 	16(b)’s 	good-
cause 	standard 	a 	difficult 	one, 	finding 	that 	“[w]hile 	it 	would
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have been well within the discretion of the district court to allow
the motion, it was not an abuse of discretion to deny it.” Id. at
14.
This case is different. Plaintiffs here moved to amend their
complaint 	five 	months 	after 	CVS 	began 	producing 	documents 	which
now 	number 	in 	the 	hundreds 	of 	thousands 	of 	pages. 	(Pls.’ 	Mem. 	in
Supp. 	of 	Their 	Mot. 	for 	Leave 	to 	File 	First 	Am. 	Compl. 	2-3, 	ECF
No. 56-1). Indeed, Defendant’s production was ongoing at the time
Plaintiffs 	moved 	to 	amend. 	(Id.) 	And 	unlike 	in 	Steir, 	discovery
had 	not 	yet 	closed. 	(Id.) 	While 	it 	may 	be 	true 	that 	Plaintiffs
received 	the 	thirty 	pages 	they 	rely 	on 	in 	their 	PAC 	on 	December
23, 	2016, 	these 	thirty 	pages 	were 	among 	3,024 	they 	received 	that
day, 	followed 	by 	401,175 	pages 	they 	received 	a 	few 	weeks 	later.
(Pls.’ Reply Brief in Supp. of Their Mot. for Leave to File First
Am. 	Compl. 	11, 	ECF 	No. 	62.) 	Under 	these 	circumstances, 	the 	Court
finds that Plaintiffs, while perhaps less diligent than they could
have 	been, 	were 	diligent 	enough 	in 	their 	review 	of 	the 	documents
to meet Rule 16(b)’s good-cause standard.5 See Salomon v. Adderly
5 Defendant 	also 	argues 	that 	allowing 	Plaintiffs’ 	amendment
would 	cause 	it 	undue 	prejudice. 	(Def.’s 	Mem. 	in 	Supp. 	of 	Obj. 	to
Pls.’ 	Mot. 	for 	Leave 	to 	File 	First 	Am. 	Compl. 	17-18.) 	But 	this
argument 	is 	unavailing: 	when 	Plaintiffs 	filed 	their 	Motion 	to
Amend, 	discovery 	was 	still 	open; 	Defendant 	had 	yet 	to 	take 	any
depositions; and Defendant had already responded to broad document
requests 	relevant 	to 	the 	PAC’s 	allegations. 	(Pls.’ 	Mem. 	in 	Supp.
of Their Mot. for Leave to File First Am. Compl. 13.) Furthermore,
amendment 	here 	is 	unlikely 	to 	cause 	a 	“major 	alteration 	in
[Defendant’s] trial tactics and strategy.” Cf. Steir, 383 F.3d at
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Indus., 	Inc., 	960 	F. 	Supp. 	2d 	502, 	507–08, 	511 	(S.D.N.Y. 	2013)
(allowing 	amendment 	where 	plaintiff 	learned 	material 	information
“through 	discovery 	after 	the 	expiration 	of 	the 	scheduling 	order
deadline”); 	Burns 	v. 	Hale 	& 	Dorr 	LLP, 	242 	F.R.D. 	170, 	174–75 	(D.
Mass. 	2007) 	(allowing 	amendment 	where 	it 	was 	argued 	that 	“the
claims which the plaintiff seeks to add, for conversion and breach
of contract, are based on facts which were only discovered during
the course of discovery”).
C. 	Rule 15(a)
Defendant’s 	arguments 	under 	Rule 	15(a) 	are 	that 	Plaintiffs’
Motion 	to 	Amend 	was 	unduly 	delayed 	and 	that 	amendment 	would 	be
futile. Neither is persuasive.
1. Undue Delay
Defendant marshals the same facts to argue undue delay as it
did 	to 	argue 	lack 	of 	diligence, 	namely, 	that 	Plaintiffs 	waited
five months after they had received documentation supporting their
new theories to move for amendment. (Def.’s Mem. in Supp. of Obj.
to 	Pls.’ 	Mot. 	for 	Leave 	to 	File 	First 	Am. 	Compl. 	(“Def.’s 	Obj.”)
16, 19, ECF No. 60-1.) Defendant also notes that Plaintiffs filed
12–13 	(quotation 	marks 	omitted) 	(finding 	major 	alteration 	likely
where 	plaintiff 	sought 	to 	add 	a 	legal 	claim 	to 	a 	complaint 	that
had sounded only in equity, and where allowing addition of such a
claim “would have required the re-opening of discovery . . . [and]
a postponement of the hearing scheduled on the pending motions for
summary judgment”).
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their 	Motion 	over 	sixteen 	months 	after 	they 	filed 	the 	original
complaint. (Id. at 16.)
These 	delays 	might 	suffice 	to 	establish 	undue 	delay 	in 	a
vacuum, 	but 	not 	in 	the 	context 	of 	this 	case. 	To 	be 	sure, 	where
significant 	time 	has 	elapsed 	between 	filing 	the 	complaint 	and
moving to amend, the movant must show a valid reason for the delay.
See In re Lombardo, 755 F.3d 1, 3 (1st Cir. 2014). And here, even
though 	the 	time 	between 	filing 	the 	complaint 	and 	moving 	to 	amend
is 	considerable, 	Plaintiffs 	have 	in 	fact 	provided 	a 	valid 	reason
for 	the 	delay: 	before 	receiving 	their 	declarations, 	Plaintiffs
were under the impression that the PBMs too were unaware of CVS’s
alleged 	pricing 	scheme. 	See 	Enzymotec 	Ltd. 	v. 	NBTY, 	Inc., 	754 	F.
Supp. 	2d 	527, 	535–39 	(E.D.N.Y. 	2010) 	(allowing 	motion 	to 	amend
filed 	over 	twenty 	months 	after 	complaint 	and 	nine 	months 	after
scheduling order deadline where plaintiff learned new facts during
discovery); 	Lanigan 	v. 	LaSalle 	Nat’l 	Bank, 	108 	F.R.D. 	660, 	663
(N.D. 	Ill. 	1985) 	(“It 	is 	not 	uncommon 	that 	facts 	disclosed 	in
discovery 	lead 	to 	new 	claims, 	and 	courts 	may 	properly 	allow 	the
plaintiff 	to 	amend 	the 	complaint 	in 	light 	of 	this 	new
information.”).
Furthermore, 	the 	five-month 	delay 	between 	receiving 	the
declarations 	and 	moving 	to 	amend 	would 	perhaps 	support 	a 	finding
of 	undue 	delay 	if 	they 	had 	not 	been 	received 	amidst 	a 	veritable
avalanche of discovery. Even the most well-staffed firm would need
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some 	time 	to 	sort 	and 	parse 	400,000 	documents. 	See 	Island 	Creek
Coal 	Co. 	v. 	Lake 	Shore, 	Inc., 	832 	F.2d 	274, 	279 	(4th 	Cir. 	1987)
(allowing amendment despite three-month delay between discovery of
new 	evidence 	in 	deposition 	and 	motion 	based 	thereon 	because
“plaintiffs 	were 	entitled 	to 	a 	reasonable 	time 	to 	investigate
through 	other 	sources 	the 	information 	they 	had 	secured 	from 	the
deposition of defendant’s witnesses”).
2. 	Futility
Defendant’s other argument under Rule 15(a) against allowing
amendment 	is 	that 	to 	do 	so 	would 	be 	futile. 	(Def.’s 	Obj. 	19-34.)
As 	discussed 	above, 	the 	Court 	uses 	the 	familiar 	12(b)(6) 	motion-
to-dismiss standard to pass on the proposed amendment’s futility.
This 	Court 	has 	already 	held 	that 	Plaintiffs’ 	negligent-
misrepresentation, 	unjust-enrichment, 	and 	statutory 	consumer-
protection 	claims 	meet 	the 	12(b)(6) 	standard. 	See 	Sheet 	Metal
Workers, 221 F. Supp. 3d at 237-39. Updating these claims in light
of 	the 	allegation 	that 	the 	PBMs 	were 	privy 	to 	CVS’s 	alleged
chicanery does not change the Court’s analysis as to these claims.6
6 	Plaintiffs 	do 	add 	a 	common-law 	fraud 	claim 	to 	their
statutory 	claims 	under 	various 	states’ 	consumer 	protection 	acts.
But 	because 	the 	same 	fraudulent 	activity 	is 	alleged 	as 	the
predicate 	to 	both 	kinds 	of 	claim, 	the 	Court 	need 	not 	revisit 	its
conclusion 	that 	Plaintiffs 	have 	met 	the 	Rule 	9(b) 	standard,
“adequately put[ting] CVS on notice of the details of the alleged
fraud.” Sheet Metal Workers, 221 F. Supp. 3d at 231.
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They continue to clear Rule 12(b)(6)’s plausibility threshold, and
therefore their amendment would not be futile under Rule 15(a).
The thornier question here is whether the same can be said of
Plaintiffs’ 	RICO 	claims. 	A 	viable 	RICO 	claim 	under 	§ 	1962(c)
requires 	four 	elements: 	“1) 	conduct; 	2) 	of 	an 	enterprise; 	3)
through a pattern; 4) of racketeering activity.” Libertad v. Welch,
53 F.3d 428, 441 (1st Cir. 1995). Defendant argues that Plaintiffs’
RICO claims are futile because they properly allege neither a RICO
enterprise, 	a 	pattern 	of 	racketeering, 	predicate 	acts 	of
racketeering, nor causation. (Def.’s Obj. 19-34.)
RICO 	defines 	“enterprise” 	as 	“any 	individual, 	partnership,
corporation, association, or other legal entity, and any union or
group 	of 	individuals 	associated 	in 	fact 	although 	not 	a 	legal
entity.” 	18 	U.S.C. 	§ 	1961(4). 	Particularly 	relevant 	to 	this 	case
are 	so-called 	“association-in-fact” 	enterprises. 	An 	association-
in-fact enterprise is “a group of persons associated together for
a common purpose of engaging in a course of conduct.” United States
v. 	Turkette, 	452 	U.S. 	576, 	583 	(1981). 	The 	Supreme 	Court 	– 	in
keeping with a line of its cases correcting lower-court decisions
that unduly restricted RICO’s scope, see Odom v. Microsoft Corp.,
486 	F.3d 	541, 	545–47 	(9th 	Cir. 	2007) 	– 	recently 	admonished 	that
the 	universe 	of 	enterprises 	covered 	by 	the 	statute 	is 	“obviously
broad,” Boyle v. United States, 556 U.S. 938, 944 (2009). See also
Nat’l Org. for Women, Inc. v. Scheidler, 510 U.S. 249, 257 (1994)
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(“RICO broadly defines ‘enterprise’ . . . .”); Sedima, S.P.R.L. v.
Imrex 	Co., 	473 	U.S. 	479, 	497 	(1985) 	(“RICO 	is 	to 	be 	read
broadly.”). 	And 	as 	to 	association-in-fact 	enterprises 	in
particular, 	the 	Boyle 	court 	found 	that 	their 	“definition 	has 	a
wide reach,” and that “the very concept of an association in fact
is expansive.” Boyle, 556 U.S. at 944.
Accordingly, an association-in-fact enterprise can be without
various accoutrements typically attending “businesslike entities.”
Id. 	at 	945. 	For 	example, 	an 	association-in-fact 	enterprise 	“need
not have a hierarchical structure or a ‘chain of command[,]’ [and]
decisions 	may 	be 	made 	on 	an 	ad 	hoc 	basis 	and 	by 	any 	number 	of
methods—by majority vote, consensus, a show of strength, etc.” Id.
at 	948. 	Moreover, 	“the 	existence 	of 	an 	association-in-fact 	is
oftentimes 	more 	readily 	proven 	by 	what 	i[t] 	does, 	rather 	than 	by
abstract 	analysis 	of 	its 	structure,” 	which 	is 	to 	say 	that 	“proof
of 	a 	pattern 	of 	racketeering 	activity 	may 	be 	sufficient 	in 	a
particular 	case 	to 	permit 	a 	jury 	to 	infer 	the 	existence 	of 	an
association-in-fact 	enterprise.” 	Id. 	at 	951 	(quotation 	marks
omitted); 	accord 	United 	States 	v. 	Patrick, 	248 	F.3d 	11, 	19 	(1st
Cir. 	2001) 	(“While 	‘enterprise’ 	and 	‘pattern 	of 	racketeering
activity’ are separate elements of a RICO offense, proof of these
two 	elements 	need 	not 	be 	separate 	or 	distinct 	but 	may 	in 	fact
coalesce.” (quotations marks omitted)).
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In 	their 	PAC, 	Plaintiffs 	allege 	that 	CVS, 	the 	various 	PBMs,
and 	ScriptSave 	formed 	either 	one 	global 	or 	three 	separate
association-in-fact 	enterprises. 	(PAC 	51-78.) 	Defendant 	argues
that both the alleged global and separate RICO enterprises amount
to 	unactionable 	“hub-and-spoke” 	structures. 	(Def.’s 	Obj. 	21-22.)
An 	enterprise 	with 	a 	hub-and-spoke 	structure 	exists 	where 	one
entity 	(the 	hub) 	transacts 	similarly 	with 	several 	other 	entities
(the 	spokes) 	after 	a 	design 	typically 	hatched 	by 	the 	hub. 	See,
e.g., 	United 	States 	v. 	Apple, 	Inc., 	791 	F.3d 	290, 	314 	(2d 	Cir.
2015). 	And 	indeed 	hub-and-spoke 	enterprises 	have 	routinely 	been
found insufficient to support RICO claims. See, e.g., In re Pharm.
Indus. 	Average 	Wholesale 	Price 	Litig., 	263 	F. 	Supp. 	2d 	172, 	183
(D. Mass. 2003) (“Most courts have found that complaints alleging
hub-and-spoke 	enterprises 	fail 	to 	satisfy 	the 	RICO 	enterprise
requirement.”) 	(collecting 	cases); 	In 	re 	Trilegiant 	Corp., 	11 	F.
Supp. 	3d 	82, 	98 	(D. 	Conn. 	2014) 	(“Hub-and-spoke 	enterprises 	have
long 	been 	held 	by 	courts 	in 	this 	circuit 	to 	be 	insufficient 	as 	a
matter 	of 	law 	to 	constitute 	the 	requisite 	enterprise 	for 	a 	RICO
violation.”).
But 	these 	unactionable 	hub-and-spoke 	enterprises 	were 	all
what courts have termed – sticking with the metaphor – “rimless,”
meaning 	there 	lacked 	some 	connection 	among 	the 	enterprises’
respective 	spokes. 	See, 	e.g., 	Moss 	v. 	BMO 	Harris 	Bank, 	N.A., 	258
F. Supp. 3d 289, 303 (E.D.N.Y. 2017) (dismissing RICO claims where
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plaintiff 	asserted 	“[a]t 	best 	. 	. 	. 	a 	rimless 	‘hub 	and 	spokes’
relationship 	between 	defendant 	[bank] 	and 	payday 	lenders 	. 	. 	.
that 	courts 	have 	consistently 	found 	insufficient 	to 	state 	a 	RICO
claim”). 	For 	example, 	the 	Third 	Circuit, 	in 	a 	case 	decided 	after
Boyle, 	dismissed 	RICO 	claims 	alleging 	that 	various 	insurance
brokers 	(the 	hubs) 	worked 	with 	various 	insurers 	(the 	spokes) 	to
defraud 	consumers 	of 	commercial- 	and 	employee-benefit 	insurance.
In re Ins. Brokerage Antitrust Litig., 618 F.3d 300, 374 (3d Cir.
2010). 	As 	to 	these 	alleged 	enterprises, 	the 	court 	stated 	that
“[e]ven 	under 	the 	relatively 	undemanding 	standard 	of 	Boyle,” 	the
“plaintiffs 	had 	failed 	to 	plead 	facts 	plausibly 	suggesting
collaboration 	among 	the 	insurers” 	and 	“therefore 	[could 	not]
provide a ‘rim’ enclosing the ‘spokes’ of the[ ] alleged ‘hub-and-
spoke’ enterprises.” Id.
However, 	the 	Insurance 	Brokerage 	court 	denied 	a 	motion 	to
dismiss 	the 	RICO 	claims 	where 	there 	were 	allegations 	of
coordination 	among 	the 	spokes. 	Id. 	at 	375–79. 	Like 	those 	alleged
in 	the 	dismissed 	claim, 	this 	enterprise 	had 	an 	insurance 	broker
for 	a 	hub 	and 	insurers 	for 	spokes, 	but 	in 	addition 	to 	evidence
that 	the 	hub 	had 	entered 	into 	bilateral 	agreements 	with 	each 	of
its spokes, there were also claims that this enterprise had engaged
in 	“bid-rigging,” 	whereby 	insurers 	would 	take 	turns 	submitting
sham 	bids 	to 	fraudulently 	steer 	business 	in 	foreordained
directions. 	Id. 	“In 	other 	words, 	the 	insurers 	provided 	sham 	bids
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to 	the 	broker, 	at 	the 	request 	of 	the 	broker, 	in 	exchange 	for
benefits provided by the broker.” Id. at 377. The court found that
“the allegations of bid rigging provide[d] the ‘rim’ to the . . .
enterprise’s 	hub-and-spoke 	configuration, 	satisfying 	Boyle’s
requirements.” Id. at 375.
The court so found even though there was no allegation of an
explicit 	agreement 	among 	the 	spokes 	to 	engage 	in 	reciprocal 	bid-
rigging. 	See 	id. 	at 	377. 	However, 	as 	the 	court 	noted, 	“the
complaint 	d[id] 	allege 	that 	one 	reason 	the 	insurers 	were 	willing
to 	furnish 	sham 	bids 	was 	so 	that 	they 	would 	be 	the 	beneficiaries
of sham bids in the future.” Id. The court in effect accepted the
allegation 	of 	an 	implicit 	agreement 	– 	a 	rim 	– 	among 	the 	insurers
based 	on 	their 	otherwise 	inexplicable 	habit 	of 	“furnish[ing]
purposefully 	uncompetitive 	sham 	bids.” 	Id. 	at 	336. 	This 	alleged
agreement – by which the enterprise was able to deceive insurance
purchasers 	“to 	a 	greater 	extent 	than 	would 	have 	been 	possible 	on
the 	strength 	of 	the 	bilateral 	relationships 	. 	. 	. 	alone” 	–
“plausibly 	suggest[ed] 	an 	interrelationship 	among 	the 	insurers,”
which 	in 	the 	court’s 	estimation 	was 	“enough 	to 	plead 	an
enterprise.” 	Id. 	at 	377-78; 	accord 	Interstate 	Circuit 	v. 	United
States, 306 U.S. 208, 226–27 (1939) (holding proof of an explicit
agreement 	unnecessary 	to 	establish 	antitrust 	conspiracy 	among
movie 	distributors 	where, 	“knowing 	that 	concerted 	action 	was
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contemplated and invited, the distributors gave their adherence to
the scheme and participated in it”).
Unlike 	the 	Third 	Circuit, 	the 	First 	Circuit 	and 	many 	of 	its
sister 	circuit 	courts 	of 	appeal 	have 	yet 	to 	comment 	on 	Boyle’s
impact, 	if 	any, 	on 	its 	association-in-fact 	jurisprudence,
particularly 	as 	it 	relates 	to 	hub-and-spoke 	enterprises. 	But
several 	district 	courts 	have 	weighed 	in, 	albeit 	to 	inconsistent
effect. 	Compare 	Trilegiant 	11 	F. 	Supp. 	3d 	at 	98–99 	(noting 	that
the Second Circuit has similarly failed to comment, but nonetheless
finding 	that 	“a 	classic 	‘hub-and-spoke’ 	formation 	in 	which 	the
spokes 	are 	separate, 	distinct 	and 	unassociated 	and 	whose 	actions
are 	uncoordinated 	does 	not 	possess 	the 	requisite 	structure 	to
constitute a RICO enterprise, even as that notion was expanded by
Boyle”), and Target Corp. v. LCH Pavement Consultants, LLC, Civil
No. 	12–1912 	(JNE/JJK), 	2013 	WL 	2470148, 	at 	*4 	(D. 	Minn. 	June 	7,
2013) 	(noting 	that 	“the 	Eighth 	Circuit 	has 	not 	addressed 	the
issue,” 	but 	siding 	with 	“the 	Third 	Circuit 	and 	several 	district
courts 	[that] 	have 	reasoned 	. 	. 	. 	a 	rimless 	hub-and-spoke[]
organization 	does 	not 	qualify 	as 	an 	association-in-fact
enterprise”), 	and 	McDonough 	v. 	First 	Am. 	Title 	Ins. 	Co., 	No. 	10–
cv–106–SM, 2011 WL 285685, at *5–7 (D.N.H. Jan. 28, 2011) (holding
spoked 	hub 	with 	“no 	connecting 	rim” 	insufficient 	for 	RICO
enterprise, 	notwithstanding 	that 	“[t]he 	First 	Circuit 	has 	yet 	to
decide whether a [rimless] hub-and-spoke organization can qualify
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as 	an 	‘enterprise’ 	for 	RICO 	purposes”), 	with 	Fuji 	Photo 	Film
U.S.A., Inc. v. McNulty, 640 F. Supp. 2d 300, 306–08, 314 (S.D.N.Y.
2009) (denying motion to dismiss RICO claim involving rimless hub-
and-spoke enterprise).
Here, though, even without definitive guidance from the First
Circuit, the Court can safely say that the allegations in the PAC
assert rim enough around the spokes, without hazarding analysis as
to 	perhaps 	the 	closest 	question 	arising 	post-Boyle, 	namely,
whether rimless hub-and-spoke enterprises are now actionable under
RICO. Before Boyle was decided, various courts had already found,
or 	at 	least 	entertained 	the 	idea, 	that 	rimmed 	hub-and-spoke
enterprises could support RICO claims. See, e.g., Cedar Swamp, 487
F. 	Supp. 	2d 	at 	451 	(noting 	that 	hub-and-spoke 	structure 	may
constitute 	a 	RICO 	enterprise 	when 	“a 	plaintiff 	. 	. 	. 	allege[s]
that 	the 	defendants 	operated 	symbiotically 	and 	played 	necessary
roles 	in 	the 	achievement 	of 	a 	common 	purpose”); 	Aiu 	Ins. 	Co. 	v.
Olmecs 	Med. 	Supply, 	Inc., 	No. 	CV-04-2934 	(ERK), 	2005 	WL 	3710370,
at 	*7–8 	(E.D.N.Y. 	Feb. 	22, 	2005). 	And 	in 	this 	case, 	Plaintiffs
have alleged just such an enterprise, pleading enough for the Court
to 	find 	that 	CVS, 	ScriptSave, 	and 	the 	PBMs 	“associated 	together
for a common purpose of engaging in a course of conduct.” Turkette,
452 U.S. at 583.7
7 It 	is 	quite 	likely 	that 	at 	least 	one 	circuit 	court 	would
disagree with this conclusion. See United Food & Commercial Workers
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Union & Emp’rs. Midwest Health Benefits Fund v. Walgreen Co., 719
F.3d 849 (7th Cir. 2013). In United Food, the Seventh Circuit held
that, 	Boyle 	notwithstanding, 	a 	plausible 	association-in-fact
enterprise 	is 	incomplete 	absent 	allegations 	that 	corporate
racketeers 	essentially 	formed 	a 	new 	entity 	that 	they 	managed
together and kept separate from their regular business activities.
See 	id. 	at 	853–56. 	The 	Seventh 	Circuit’s 	position 	appears 	closer
to 	that 	enunciated 	in 	Boyle’s 	dissent 	than 	in 	its 	majority. 	See
Boyle, 	556 	U.S. 	at 	952 	(Stevens, 	J., 	dissenting) 	(“In 	my 	view,
Congress 	intended 	the 	term 	‘enterprise’ 	. 	. 	. 	to 	refer 	only 	to
businesslike 	entities 	that 	have 	an 	existence 	apart 	from 	the
predicate acts committed by their employees or associates.”).
Whatever 	United 	Food’s 	congruence 	with 	Boyle, 	this 	Court
declines to follow the Seventh Circuit because presumably the First
Circuit 	would 	disagree 	with 	its 	analysis: 	requiring 	RICO
plaintiffs 	to 	plead 	structured, 	intimate 	relations 	among 	an
enterprise’s members appears supererogatory given the substantial
“breadth” the Boyle court read into RICO’s enterprise element, as
discussed 	above. 	See 	Boyle, 	556 	U.S. 	at 	949. 	After 	Boyle, 	“if
defendants 	band 	together 	to 	commit 	[violations] 	they 	cannot
accomplish 	alone 	. 	. 	. 	they 	cumulatively 	are 	conducting 	the
association-in-fact 	enterprise’s 	affairs, 	and 	not 	[simply] 	their
own affairs.’” Ins. Brokerage, 618 F.3d at 378 (quoting Gregory P.
Joseph, 	Civil 	RICO: 	A 	Definitive 	Guide 	332 	(3d 	ed. 	2010)). 	Even
before 	Boyle, 	the 	First 	Circuit 	did 	not 	require 	that 	a 	RICO
enterprise 	have 	an 	“ascertainable 	structure,” 	recognizing 	the
reality that not all such enterprises would “observe the niceties
of legitimate organizational structures.” Patrick, 248 F.3d at 19.
RICO, 	in 	other 	words, 	prohibits 	more 	than 	the 	most 	marked
illegality. 	See 	United 	States 	v. 	Mubayyid, 	658 	F.3d 	35, 	57 	(1st
Cir. 2011) (finding sufficient evidence to support conviction for
conspiracy 	even 	though 	“[t]he 	government 	presented 	no 	direct
evidence 	of 	an 	agreement 	either 	among 	the 	defendants 	or 	between
any 	defendant 	and 	an 	unindicted 	co-conspirator,” 	because, 	inter
alia, 	“[b]y 	their 	very 	nature, 	criminal 	conspiracies 	are
clandestine”). The statute does not require each of an enterprise’s
various entities to work side-by-side with every other such entity.
Indeed, various circuit courts have found that an association-in-
fact 	enterprise 	can 	exist 	despite 	ignorance 	on 	the 	part 	of 	some
participants 	as 	to 	the 	identity 	of 	the 	others. 	See, 	e.g., 	United
States v. Rastelli, 870 F.2d 822, 828 (2d Cir. 1989) (noting proof
that 	RICO 	conspirator 	knew 	all 	other 	conspirators, 	or 	had 	full
knowledge 	of 	conspiracy 	was 	unnecessary, 	because 	“[i]t 	is
sufficient that defendant know the general nature of the enterprise
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To 	be 	sure, 	Plaintiffs 	do 	not 	allege 	an 	explicit 	agreement
among 	the 	PBMs 	to 	look 	the 	other 	way 	as 	CVS 	failed 	to 	report 	HSP
prices. 	But 	they 	do 	allege 	the 	PMBs 	communicated 	with 	each 	other
and 	with 	CVS 	in 	order 	to 	orchestrate 	the 	alleged 	fraud. 	(PAC 	33-
38, 	60-61, 	66.) 	In 	at 	least 	one 	instance, 	CVS 	played 	courier
between two PBMs – Medco and Caremark – apprising the latter that
the former had agreed to participate in CVS’s scheme. (PAC 33-38.)
Also 	alleged, 	(PAC 	31-43, 	45, 	51-57), 	is 	that 	these 	entities’
interest in defrauding Plaintiffs was advanced to a “greater extent
than 	would 	have 	been 	possible 	on 	the 	strength 	of 	the 	bilateral
relationships between [CVS] and each [PBM] alone,” Ins. Brokerage,
618 	F.3d 	at 	377. 	See 	also 	United 	States 	v. 	Niemi, 	579 	F.3d 	123,
127 	(1st 	Cir. 	2009) 	(noting 	that 	interdependence 	among 	spokes 	in
criminal conspiracy “may be shown where one participant knows that
his 	own 	success 	depends 	on 	the 	continued 	existence 	and 	health 	of
the 	[criminal] 	organization 	as 	a 	whole”); 	cf. 	New 	England
Carpenters Health and Welfare Fund v. Abbott Labs., Case No. 12 CV
1662, 	2014 	WL 	4783833, 	at 	*6 	(N.D. 	Ill. 	Sept. 	25, 	2014) 	(finding
enterprise 	element 	not 	met 	where 	the 	complaint 	contained 	“no
allegations that pharmacies that comprise the RICO enterprise are
and know that the enterprise extends beyond his individual role”);
United States v. De Peri, 778 F.2d 963, 975 (3d Cir. 1985) (noting
that 	“knowledge 	[of 	the 	identities 	of 	all 	other 	participants] 	is
not essential to the finding of a RICO conspiracy”).
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in 	communication 	with 	one 	another 	or 	are 	even 	aware 	that 	other
pharmacies are part of the enterprise”).
Plaintiffs have also claimed that the PBMs acted contrary to
their individual interests by participating in the alleged scheme.
(PAC 	51-57.) 	See 	Apple, 	Inc., 	791 	F.3d 	at 	314 	(finding 	necessity
of 	implicit 	agreement 	among 	spokes 	often 	derives 	from 	the 	fact
that 	“the 	spokes 	would 	not 	have 	gone 	along 	with 	[their 	various
agreements with the hub] except on the understanding that the other
[spokes] 	were 	agreeing 	to 	the 	same 	thing.” 	(quotation 	marks
omitted)). 	The 	PBMs 	compete 	with 	each 	other 	for 	the 	business 	of
entities 	like 	Plaintiffs. 	(PAC 	51-57.) 	It 	would 	stand 	to 	reason,
then, that each PBM would be incented to require CVS to report HSP
prices 	as 	its 	U&C 	prices 	– 	in 	order 	to 	secure 	lower 	drug 	prices
for its current customers and to attract those of its competitors.
That the PBMs in this case seemingly did not act as they would be
expected 	to 	in 	a 	competitive 	market, 	but 	rather 	in 	a 	manner 	that
increased 	profit 	to 	both 	the 	PBMs 	and 	CVS 	at 	the 	expense 	of 	the
plans, 	lends 	further 	credence 	to 	Plaintiffs 	allegation 	that 	they
acted 	together. 	Cf. 	Evergreen 	Partnering 	Grp., 	Inc. 	v. 	Pactiv
Corp., 720 F.3d 33, 50 (1st Cir. 2013) (finding relevant to motion-
to-dismiss 	analysis 	of 	plaintiff’s 	antitrust 	claim 	the 	fact 	that
“[t]he complaint . . . state[d] that the defendant[s] . . . acted
against 	their 	own 	best 	interests 	when 	refusing 	to 	deal 	with
[plaintiff],” 	because 	doing 	so 	“would 	have 	produced 	abundant
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savings 	to 	customers 	and 	resulted 	in 	a 	higher 	volume 	of 	customer
sales 	due 	to 	the 	attractiveness 	of 	potential 	savings 	and
environmental benefits”).
This 	is 	not 	to 	say 	that 	each 	PBM’s 	interpretation 	of 	its
contracts to exclude HSP prices, on its own, risked RICO liability.
Even that they all did so more or less simultaneously may be mere
coincidence, 	the 	result 	of 	non-collusive 	contract 	interpretation
in 	their 	respective 	legal 	departments. 	On 	the 	other 	hand, 	“it 	is
well established that vertical agreements, lawful in the abstract,
can 	in 	context 	‘be 	useful 	evidence 	for 	a 	plaintiff 	attempting 	to
prove 	the 	existence 	of 	a 	horizontal 	cartel,’ 	particularly 	where
multiple 	competitors 	sign 	vertical 	agreements 	that 	would 	be
against 	their 	own 	interests 	were 	they 	acting 	independently.”
Apple, 	Inc., 	791 	F.3d 	at 	319–20 	(quoting 	Leegin 	Creative 	Leather
Prods., 	Inc. 	v. 	PSKS, 	Inc., 	551 	U.S. 	877, 	893 	(2007)) 	(citing
Interstate 	Circuit, 	306 	U.S. 	at 	222; 	and 	Toys 	“R” 	Us, 	Inc. 	v.
F.T.C., 	221 	F.3d 	928, 	935–36 	(7th 	Cir. 	2000)). 	The 	question 	of
coincidence 	or 	not 	will 	undoubtedly 	be 	raised 	again 	at 	summary
judgment and, if necessary, at trial. See Liu v. Amerco, 677 F.3d
489, 	497 	(1st 	Cir. 	2012) 	(“The 	place 	to 	test 	factual 	assertions
for 	deficiencies 	and 	against 	conflicting 	evidence 	is 	at 	summary
judgment or trial . . . .”). But for now, at the motion-to-dismiss
stage, 	the 	Court 	finds 	it 	at 	least 	plausible, 	assuming 	the
allegations 	in 	the 	PAC 	are 	true, 	that 	each 	PBM, 	at 	the 	behest 	of
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CVS, acted against its individual interest by choosing to adopt an
internal policy interpreting U&C price to exclude CVS’s HSP price,
with the expectation (and in at least one instance, a confirmation)
that 	competitors 	would 	do 	the 	same. 	In 	short, 	Plaintiffs 	have
adequately pleaded a rim around a spoked hub.8
Defendant’s 	remaining 	arguments 	for 	why 	amendment 	would 	be
futile 	are 	similarly 	unconvincing. 	Contrary 	to 	Defendant’s
argument 	that 	the 	PAC 	fails 	to 	allege 	multiple 	schemes 	and
therefore 	a 	pattern 	of 	racketeering, 	(Def.’s 	Obj. 	25), 	the 	First
Circuit 	has 	expressly 	stated 	that 	“showing 	a 	‘pattern’ 	does 	not
necessarily 	require 	proof 	of 	multiple 	criminal 	‘schemes,’” 	Efron
v. 	Embassy 	Suites 	(P.R.), 	Inc., 	223 	F.3d 	12, 	16 	(1st 	Cir. 	2000)
(quoting 	H.J. 	Inc. 	v. 	Nw. 	Bell 	Tel. 	Co., 	492 	U.S. 	229, 	240-41
(1989)). 	“[O]ne 	scheme 	that 	extends 	over 	a 	substantial 	period 	of
time, 	or 	that 	shows 	signs 	of 	extending 	indefinitely 	into 	the
future, can establish a pattern.” Efron, 223 F.3d at 16. Such was,
allegedly, 	the 	case 	here. 	Furthermore, 	the 	alleged 	scheme
consisted of various well-pleaded instances of the RICO predicates
mail 	and 	wire 	fraud. 	See 	Sheet 	Metal 	Workers, 	221 	F. 	Supp. 	3d 	at
8 Because the Court finds the global enterprise is adequately
pleaded, 	the 	same 	is 	true 	a 	fortiori 	of 	the 	lesser-included
enterprises, especially given that Defendant’s arguments as to the
latter track those as to the former. See Schwartz v. Lawyers Title
Ins. 	Co., 	970 	F. 	Supp. 	2d 	395, 	405 	(E.D. 	Pa. 	2013) 	(finding
multiple 	bilateral 	association-in-fact 	RICO 	enterprises 	well-
pleaded after finding same as to larger enterprise).
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231 	(“The 	Court 	finds 	that 	Plaintiffs’ 	Complaint 	satisfies 	Rule
9(b). 	It 	is 	clear 	from 	the 	Complaint 	that 	the 	alleged 	false
statement to the Indiana Funds was the reported U & C price, which
Plaintiffs 	claim 	was 	inflated.”). 	Finally, 	the 	Court 	finds 	that
Plaintiffs have adequately pleaded causation. Despite Defendant’s
argument that Plaintiffs knew they were not paying HSP prices and
therefore would have paid those prices but for the fraud, (Def.’s
Obj. 26-30), the Court must, at this stage, credit all Plaintiffs’
well-pleaded allegations, including that they were unaware of the
alleged fraud, (PAC 44).
III. Conclusion
For 	the 	above 	reasons, 	Plaintiffs’ 	Motion 	(ECF 	No. 	56) 	is
GRANTED.
William E. Smith
Chief Judge
Date: March 31, 2018
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