UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Asuris Northwest Health; Blue Cross and 

Blue Shield of Kansas City; Cambia Health 

Solutions, Inc.; Regence BlueShield of Idaho, 

Inc.; Regence BlueCross and BlueShield of 

Oregon; Regence BlueCross and BlueShield 

of Utah; and Regence BlueShield of 

Washington,

Plaintiffs,

v.

Walgreen Co. and Walgreens Boots

Alliance, Inc.,

Defendants.

Case No. 1:20-cv-4940

consolidated with

Case No. 1:20-cv-1853

Case No. 1:20-cv-1929

Case No. 1:20-cv-3332

Case No. 1:20-cv-4738

Honorable Virginia M. Kendall

Magistrate Judge Sheila M. Finnegan 

MEMORANDUM IN SUPPORT OF DEFENDANTS 

WALGREEN CO.’S & WALGREENS BOOTS ALLIANCE, INC.’S

MOTION TO DISMISS CASE NO. 1:20-CV-4940

UNDER FED. R. CIV. P. 12(B)(7) & 12(B)(6)

Jeffrey J. Bushofsky

Laura G. Hoey

Charles D. Zagnoli

ROPES & GRAY LLP

191 North Wacker Drive

32nd Floor

Chicago, Illinois 60606

Tel: (312) 845-1200

Fax: (312) 845-5522

Jeffrey.Bushofsky@ropesgray.com

Laura.Hoey@ropesgray.com

Charles.Zagnoli@ropesgray.com

Attorneys for Defendants Walgreen Co. 

and Walgreens Boots Alliance, Inc.

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i

TABLE OF CONTENTS

Introduction................................................................................................................................... 1

Statement of Facts......................................................................................................................... 2

Argument....................................................................................................................................... 4

I. Rule 12(b)(7) – Plaintiffs Failed to Join the PBMs, Indispensable Parties that Defeat 

Diversity and Are Not Subject to the Court’s Jurisdiction; Dismissal Is Required ...... 4

II. Rule 12(b)(6) – Plaintiffs Have Not Adequately Pleaded Their Common-Law Claims 

(Counts 1–3 & 9) .................................................................................................................. 7

A. Plaintiffs’ Claims Fail to Satisfy Rule 8(a), Much Less Rule 9(b)................................ 8

1. Plaintiffs have failed to plead that Walgreens made any false statements. .................... 9

2. Plaintiffs have failed to plead that Walgreens knew that Plaintiffs expected reported 

U&C prices to include PSC prices................................................................................ 10

3. Plaintiffs have failed to plead—and cannot plead—that they reasonably relied on the 

reported U&C prices..................................................................................................... 10

4. Plaintiffs have failed to plead the circumstances constituting the alleged fraud with 

particularity, as required under Rule 9(b)..................................................................... 11

B. Plaintiffs’ Fraudulent Concealment and Negligent Misrepresentation Claims 

(Counts 2 & 3) Also Fail Because Walgreens Owed Plaintiffs No Duty.................... 11

C. Plaintiffs’ Unjust Enrichment Claim (Count 9) Must Be Dismissed ......................... 12

III. Rule 12(b)(6) – Plaintiffs’ Statutory Claims Fail (Count 4–8)........................................ 12

A. Plaintiffs’ UTPA Claim Is Untimely (Count 4)............................................................ 12

B. Plaintiffs Lack Standing to Bring an ICPA Claim (Count 5)..................................... 13

C. Plaintiffs’ ICFA and IUDTPA Claims Fail Because Plaintiffs Have Failed to Plead 

an Illinois Nexus (Counts 7–8)....................................................................................... 13

D. Plaintiffs’ Statutory Claims (Counts 4–8) Fail on the Merits.................................... 14

IV. All Claims against WBA Must Be Dismissed ................................................................... 15

Conclusion ................................................................................................................................... 15

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TABLE OF AUTHORITIES

 Page(s) 

Cases

In re 100% Grated Parmesan Cheese Mktg. & Sales Practices Litig., 

348 F. Supp. 3d 797 (N.D. Ill. 2018) .......................................................................................15

Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 

751 F.3d 796 (7th Cir. 2014) .....................................................................................................7

American Pipe & Construction Co. v. Utah, 

414 U.S. 538 (1974) .................................................................................................................13

Avery v. State Farm Mut. Auto Ins. Co., 

216 Ill. 2d 100 (2005) ........................................................................................................13, 14

Bass v. Prime Cable of Chi., Inc., 

284 Ill. App. 3d 116 (1st Dist. 1996) .......................................................................................11

Bell Atlantic Corp. v. Twombly, 

550 U.S. 544 (2007) ...................................................................................................................8

BI3, Inc. v. Hamor, 

No. 08 CV 2384, 2011 WL 9728 (N.D. Ill. Jan. 3, 2011) ..........................................................2

Bonnstetter v. Chicago, 

811 F.3d 969 (7th Cir. 2016) ...................................................................................................13

Chaudry v. Musleh, 

No. 17 C 1813, 2018 WL 3361846 (N.D. Ill. July 9, 2018) ......................................................7

Cleary v. Philip Morris Inc., 

656 F.3d 511 (7th Cir. 2011) ...................................................................................................12

Corcoran v. CVS Health Corp., 

No. 15-cv-03504, 2017 WL 3873709 (N.D. Cal. Sept. 5, 2017), rev’d, 779 F. 

App’x 431 (9th Cir. 2019) .........................................................................................................9

Creative Trade Grp., Inc. v. Int’l Trade Alliance, Inc., 

No. 08 C 2561, 2010 WL 1541308 (N.D. Ill. Apr. 16, 2010) ............................................2, 4, 5

In re: Dairy Farmers of Am., Inc. Cheese Antitrust Litig., 

No. 9-cv-3690, 2015 WL 3988488 (N.D. Ill. June 29, 2015) ..................................................13

Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equip. Co., Ltd., 

759 F.3d 787 (7th Cir. 2014) .....................................................................................................6

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iii

Fleshman v. Wells Fargo Bank, N.A., 

27 F. Supp. 3d 1127 (D. Or. 2014) ....................................................................................14, 15

Forth v. Walgreen Co., 

No. 17-cv-2246, 2018 WL 1235015 (N.D. Ill. Mar. 9, 2018) .................................................12

United States ex rel. Garbe v. Kmart Corp., 

824 F.3d 632 (7th Cir. 2016) .....................................................................................................3

Gen. Accident Ins. Co. of Am. v. Old Repub. Int’l Corp., 

648 F. Supp. 634 (N.D. Ill. 1986) ..............................................................................................7

Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 

105 Wash. 2d 778 (1986) (en banc) ...................................................................................14, 15

Henson v. CSC Credit Servs., 

29 F.3d 280 (7th Cir. 1994) .......................................................................................................2

Int’l Star Registry of Ill. v. ABC Radio Network, Inc., 

451 F. Supp. 2d 982 (N.D. Ill. 2006) .................................................................................11, 15

Martin Implement Sales, Inc. v. Ford New Holland, Inc., 

No. 87 C 8883, 1989 WL 31031 (N.D. Ill. Mar. 29, 1989) .......................................................6

McIntosh v. Walgreens Boots Alliance, Inc., 

2019 IL 123626 ........................................................................................................................11

Moorman Mfg. Co. v. Nat’l Tank Co., 

91 Ill. 2d 69 (1982) ............................................................................................................11, 12

N. Grain Mktg., LLC v. Greving, 

743 F.3d 487 (7th Cir. 2014) .....................................................................................................6

Neptuno Treuhand-Und Verwaltungsgesellschaft Mbh v. Arbor, 

295 Ill. App. 3d 567 (1st Dist. 1998) .........................................................................................8

Pearson v. Philip Morris, Inc., 

358 Or. 88 (2015) .....................................................................................................................14

Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 

631 F.3d 436 (7th Cir. 2011) ...............................................................................................8, 11

Pirelli Armstrong Tire Corp. v. Walgreen Co., 

No. 09 C 2046, 2009 WL 2777995 (N.D. Ill. Aug. 31, 2009) .................................................12

United States ex rel. Proctor v. Safeway Inc., 

No. 11-cv-3406, 2020 WL 3132397 (C.D. Ill. June 12, 2020) ................................................10

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Progress Printing Corp. v. Jane Byrne Political Comm., 

235 Ill. App. 3d 292 (1st Dist. 1992) .........................................................................................5

Saenz v. Pittenger, 

78 Or. App. 207 (1986) ......................................................................................................12, 13

SBC Holdings, Inc. v. Travelers Cas. & Sur. Co., 

374 Ill. App. 3d 1 (1st Dist. 2007) .............................................................................................8

United States ex rel. Schutte v. Supervalu, Inc., 

No. 11-3290, 2020 WL 3577996 (C.D. Ill. July 1, 2020) ....................................................9, 10

Scott v. Ill. Bell Tel. Co., 

169 F. Supp. 3d 845 (N.D. Ill. 2016) .......................................................................................13

Sears v. Likens, 

912 F.2d 889 (7th Cir. 1990) .............................................................................................11, 15

Serv. Corp. Int’l v. Stericycle, Inc., 

No. 19 C 1960, 2020 WL 43017 (N.D. Ill. Jan. 4, 2020) ........................................................15

Surfside Non-Surgical Orthopedics P.A. v. Allscripts Healthcare Solutions, Inc., 

No. 18 C 566, 2019 WL 2357030 (N.D. Ill. June 4, 2019) .....................................................15

Tarzian v. Kraft Heinz Foods Co., 

No. 18 C 7148, 2019 WL 5064732 (N.D. Ill. Oct. 10, 2019) ..................................................14

Taylor v. McNichols, 

149 Idaho 826 (2010) .........................................................................................................13, 15

U.S. Bd. of Oral Implantology v. Am. Bd. of Dental Specialties, 

390 F. Supp. 3d 892 (N.D. Ill. 2019) .......................................................................................13

Zarecor v. Morgan Keegan & Co., Inc., 

801 F.3d 882 (8th Cir. 2015) ...................................................................................................13

Statutes

815 ILCS 505/2 ..............................................................................................................................14

815 ILCS 505/2B.3 ........................................................................................................................14

815 ILCS 510/3 ..............................................................................................................................14

28 U.S.C. § 1367 ..............................................................................................................................6

Idaho Code § 48-608 ......................................................................................................................14

Or. Rev. Stat. § 646.638 ...........................................................................................................12, 14

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Wash. Rev. Code § 19.86.020........................................................................................................14

Other Authorities

Fed. R. Civ. P. 10 .............................................................................................................................2

Fed. R. Civ. P. 12 ...............................................................................................................2, 4, 7, 12 

Fed. R. Civ. P. 19 .........................................................................................................................5, 7 

Fed. R. Evid. 201 .............................................................................................................................2

Rest. (2d) Agency § 1 ......................................................................................................................5

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INTRODUCTION

This matter is the fifth in a series of nearly identical, misguided complaints filed by the 

same counsel on behalf of large healthcare insurers seeking a windfall recovery based on a theory 

of liability that Plaintiffs lifted wholesale from an inapposite government case about Medicaid 

rules.1 Plaintiffs fail in their attempt to twist the government fraud theory from that other case into 

the framework of sophisticated commercial contracts that defines Plaintiffs’ business relationships 

with Defendant Walgreen Co. (“Walgreens”). Once more, Plaintiffs focus on a single contractual 

term, “Usual & Customary” (“U&C”), contained in agreements between Walgreens and the 

pharmacy benefit managers (“PBMs”) who acted as Plaintiffs’ agents for purposes of pharmacy 

reimbursement transactions. See Pls.’ Compl., No. 1:20-cv-4940, ECF No. 1 (“Compl.”), ¶¶ 41–

43, 45, 53–54. According to Plaintiffs, the U&C prices Walgreens reported to Plaintiffs’ PBMs 

should have reflected, but did not reflect, the special prices available only to members of certain 

discount clubs, such as Walgreens’ Prescription Savings Club (“PSC”).2 Plaintiffs again suggest 

that they should never pay the negotiated rate for a drug if any customer could buy it for a lower 

price, even if the customer could obtain the lower price only by joining PSC. Once more, Plaintiffs 

are dead wrong, because their agents, the PBMs, do not require or expect Walgreens to include 

discount club rates in its reported U&C prices, and they never have.

 1 All five cases in the series—this case; BCBSM, Inc. v. Walgreen Co., No. 1:20-cv-1853 (“BCBSM”); 

Horizon Healthcare Servs., Inc. v. Walgreen Co., No. 1:20-cv-3332; HealthNow New York Inc. v. Walgreen 

Co., No. 1:20-cv-1929; and Blue Cross & Blue Shield of Arizona, Inc. v. Walgreen Co., No. 1:20-cv-4738—

were consolidated before this Court. See 1:20-cv-1853, ECF No. 86.

2 Plaintiffs also reference “other similar discount programs,” including JustRx. See, e.g., Compl. ¶¶ 11–12. 

Plaintiffs do not (and cannot) allege, however, that Walgreens owns or operates JustRx or any of these 

“other similar discount programs.” In any event, Plaintiffs focus almost exclusively on PSC, see, e.g., id.

¶¶ 2, 9; id., Ex. 1, and every “exemplar overcharge[]” Plaintiffs identify allegedly occurred through PSC.

See id. ¶ 73 n.45; id., Ex. 2. Accordingly, this memorandum focuses on PSC, though Plaintiffs’ vague 

allegations about other discount programs fail for most of the same reasons.

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making essentially the same allegations Plaintiffs make here, see id. ¶ 30; and (iii) on January 24, 

2019, Walgreens publicly settled government claims related to its U&C prices. Id. ¶ 2.9

ARGUMENT

I. RULE 12(B)(7) – PLAINTIFFS FAILED TO JOIN THE PBMS, INDISPENSABLE 

PARTIES THAT DEFEAT DIVERSITY AND ARE NOT SUBJECT TO THE 

COURT’S JURISDICTION; DISMISSAL IS REQUIRED

This case revolves around the contracts and course of dealing between Walgreens and 

Plaintiffs’ agents, the PBMs. The PBMs are the only entities that have relevant contracts with both

Walgreens and Plaintiffs; they served as the “sole conduit” between Walgreens and Plaintiffs in a 

purportedly massive fraud scheme. Creative Trade Grp., 2010 WL 1541308, at *4. For each 

Plaintiff, the PBM-Walgreens contracts are the instruments under which Walgreens agrees to 

submit U&C prices—the heart of Plaintiffs’ purported fraud case. See Compl. ¶¶ 41, 45. The PBMs 

are thus required parties. See Creative Trade Grp., 2010 WL 1541308, at *3–5. However, the 

relevant PBMs are not subject to personal jurisdiction in Illinois or their presence would destroy 

diversity. Because this case cannot proceed without the PBMs, Rule 12(b)(7) mandates dismissal.

First, the PBMs are required parties under Rule 19(a)(1). The PBMs clearly “claim[] an 

interest relating to the subject of the action,” and the Court “cannot accord complete relief among 

existing parties” without them. Fed. R. Civ. P. 19(a)(1). Walgreens interacted with Plaintiffs solely 

through the PBMs. The PBMs adjudicated reimbursement claims with full knowledge regarding 

the U&C provisions in both the Walgreens-PBM and PBM-Plaintiff contracts and with full 

knowledge that Walgreens was offering discounted prices to PSC members that it was not 

reporting as U&C prices. See, e.g., Compl. ¶¶ 53–55; Zagnoli Decl., Exs. 1–4.10 If the PBMs have 

 9 See United States ex rel. Baker v. Walgreens, Inc., No. 1:12-cv-00300-JPO, Stipulation & Order of 

Settlement & Dismissal, ECF No. 53.

10 The Court can rely on extrinsic evidence to resolve a Rule 12(b)(7) motion. See supra, note 4.

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contractual obligations or made representations to their principals (Plaintiffs) that are inconsistent 

with their contracts and course of dealings with Walgreens, Plaintiffs’ claims are against the 

PBMs, not Walgreens. See Creative Trade Grp., 2010 WL 1541308, at *4. 

The PBMs’ absence also leaves Walgreens “subject to a substantial risk of incurring 

double, multiple, or otherwise inconsistent obligations.” Fed. R. Civ. P. 19(a)(1)(B)(ii). Because 

Plaintiffs “employ[] the services of a PBM” to “adjudicate and administer prescription benefits . . . 

on their behalf” subject to a “contractual . . . reimbursement formula,” Compl. ¶¶ 52, 55, the PBMs 

are Plaintiffs’ agents. See, e.g., Rest. (2d) Agency § 1. And because the PBMs are Plaintiffs’ 

agents, Walgreens was entitled to rely on the PBMs’ representations and course of dealings 

regarding what the U&C price must—and need not—include. See, e.g., Progress Printing Corp. 

v. Jane Byrne Political Comm., 235 Ill. App. 3d 292, 307–10 (1st Dist. 1992). 

OptumRx, Prime,11 and Express Scripts have all testified publicly that they have 

consistently taken the position that, when pharmacies require customers to join a membership club 

to take advantage of the club’s lower prices, the pharmacies need not report those membership 

club prices as U&C. See Zagnoli Decl., Ex. 1, ¶ 12; id. Ex. 2, ¶ 17; id. Ex. 3, ¶ 20; id. Ex. 4, ¶ 18. 

Moreover, the contracts between Walgreens and OptumRx and Walgreens and Express Scripts 

. Walgreens’ 

January 1, 2017, Pharmacy Network Agreement with OptumRx 

” Zagnoli Decl., Ex. 5 § 1.43. Similarly, a 2017 amendment to Walgreens’ 

contract with Express Scripts 

” Zagnoli Decl., Ex. 6, ¶ 4; id. Ex. 7. 

 

11 Prime’s supplemental declarations, see Zagnoli Decl., Exs. 8–9, do not negate its original testimony. 

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The PBMs’ binding contracts and sworn testimony directly contradict Plaintiffs’ claims; should 

Plaintiffs prevail in this case, however, Walgreens would have to submit U&C prices contrary to 

its contracts and long course of dealing with Plaintiffs’ PBMs. Cf. Martin Implement Sales, Inc. v. 

Ford New Holland, Inc., No. 87 C 8883, 1989 WL 31031, at *3 (N.D. Ill. Mar. 29, 1989). 

Second, the PBMs cannot be joined, either because they would divest this Court of subjectmatter jurisdiction, or because they are not subject to personal jurisdiction in Illinois. Prime and 

Express Scripts plainly defeat diversity jurisdiction. Prime, , 

see Compl. ¶ 39(e), is owned by 18 Blue Cross entities, including Blue Cross and Blue Shield of 

Illinois and several Cambia Plaintiffs.12 Because an LLC has the citizenship of each of its 

members, Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equip. Co., Ltd., 759 F.3d 787, 

787–88 (7th Cir. 2014), Prime destroys diversity whether it joins the case as a plaintiff (adverse to 

both Defendants, each an Illinois citizen) or a defendant (adverse to multiple Plaintiff-owners 

sharing Prime’s citizenships). Express Scripts is a Delaware corporation with its principal place of 

business in Missouri, meaning it shares Delaware citizenship with Defendant WBA and Missouri 

citizenship with Plaintiff Blue KC.13 Again, the PBM defeats diversity and divests the Court of 

jurisdiction regardless of which side of the caption it occupies as a party. See 28 U.S.C. § 1367(b). 

This Court also lacks personal jurisdiction over OptumRx (and Express Scripts and Prime), 

so OptumRx is not subject to service of process. See Fed. R. Civ. 19(a)(1). Because Plaintiffs 

invoke diversity jurisdiction, Compl. ¶ 31, the forum state’s jurisdictional rules control. See N. 

Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). Illinois courts may exercise 

personal jurisdiction to the extent permitted by the Constitution, see id at 491–92, but haling 

 

12 See Prime Therapeutics, Owner clients, https://www.primetherapeutics.com/en/news/ 

Resources/clients.html.

13 See Zagnoli Decl. Ex. 6; id. Ex. 7 ¶ 8.2 ( ). 

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OptumRx, Express Scripts, or Prime into an Illinois court for this case would violate the Fourteenth 

Amendment. These PBMs are not subject to general personal jurisdiction in Illinois because they 

are not “at home” here.14 None is headquartered, incorporated, or has its primary operations in this 

State. See Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 

800 (7th Cir. 2014). The Court also lacks specific jurisdiction over these PBMs. Id. at 801–02. If, 

for example, Plaintiffs sued these PBMs for fraudulently reporting U&C prices to Plaintiffs, the 

PBMs could not be dragged into court in Illinois by out-of-state Plaintiffs simply because 

Walgreens is based in Illinois. In that case, the PBMs’ only suit-related contacts with Illinois would 

be their contracts with Walgreens, and the PBMs’ contacts with Illinois through other parties do 

not subject them to jurisdiction here. See id. at 801. 

Third, the action cannot “in equity and good conscience” proceed without the PBMs. Fed. 

R. Civ. P. 19(b). “The Seventh Circuit has repeatedly explained that a contracting party” like each 

of the PBMs here, “is the paradigm of an indispensable party.” Chaudry v. Musleh, No. 17 C 1813, 

2018 WL 3361846, at *4 (N.D. Ill. July 9, 2018) (quotations omitted). As a result, the Court must 

dismiss the Complaint. See Gen. Accident Ins. Co. of Am. v. Old Repub. Int’l Corp., 648 F. Supp. 

634, 638 (N.D. Ill. 1986). 

II. RULE 12(B)(6) – PLAINTIFFS HAVE NOT ADEQUATELY PLEADED THEIR

COMMON-LAW CLAIMS (COUNTS 1–3 & 9) 

The Court must also dismiss this case under Rule 12(b)(6) for reasons that are now familiar 

to the Court. Plaintiffs’ muddled common-law fraud and misrepresentation claims (Counts 1–3) 

 

14 OptumRx is a California corporation with its principal place of business in California. See Corporation 

– Statement of Information, (filed July 27, 2020), 

https://businesssearch.sos.ca.gov/Document/RetrievePDF?Id=01569496-28688315. Express Scripts is a 

Delaware corporation with its principal place of business in Missouri. See supra, note 13. Prime is a 

Delaware LLC with its principal place of business in Minnesota. See Prime Therapeutics LLC, 

https://mblsportal.sos.state.mn.us/Business/SearchDetails?filingGuid=6a9c9c1b-8bd4-e011-a886-

001ec94ffe7f. 

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fail to satisfy even Rule 8(a)’s basic pleading standards, see Bell Atlantic Corp. v. Twombly, 550 

U.S. 544, 570 (2007), much less the more demanding standards under Rule 9(b). See, e.g., Pirelli 

Armstrong Tire Corp. Retiree Med. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441, 446–47 

(7th Cir. 2011). Because Plaintiffs’ unjust enrichment claim (Count 9) relies on the same faulty 

allegations, it too must be dismissed.

A. Plaintiffs’ Claims Fail to Satisfy Rule 8(a), Much Less Rule 9(b)

To plead fraud, fraudulent nondisclosure, and negligent misrepresentation, Plaintiffs must 

at least allege that Walgreens made a false statement or concealed a material fact, and that Plaintiffs 

reasonably relied on that statement or omission. Neptuno Treuhand-Und Verwaltungsgesellschaft 

Mbh v. Arbor, 295 Ill. App. 3d 567, 571–575 (1st Dist. 1998).15 To plead fraud and fraudulent 

nondisclosure, Plaintiffs must also allege that Walgreens knew its U&C prices were false. Id.

Plaintiffs’ fraud-based claims (Counts 1–3) thus fail from the start: the Complaint demonstrates 

that contracts, not vague, varied industry standards, define U&C. By relying on industry standards 

alone, Plaintiffs cannot plausibly plead—let alone plead with particularity—that Walgreens made 

any false statements or that Walgreens reported any U&C prices knowing them to be false.

Plaintiffs never clearly allege that Walgreens told Plaintiffs that its U&C prices included 

discount club prices, or that they did not know that Walgreens’ U&C prices excluded such prices. 

Instead, Plaintiffs complain that Walgreens failed to disclose certain details about PSC. Plaintiffs 

fail to plead plausibly how Plaintiffs reasonably could have relied on any notional representation 

by Walgreens that it was reporting discount club prices as U&C. Walgreens has advertised its 

lower PSC prices since 2007, and, for more than a decade, plaintiffs have accused pharmacies of 

 15 Illinois law applies to the common-law claims as there is no conflict between Illinois and any other 

potentially applicable states’ law. See SBC Holdings, Inc. v. Travelers Cas. & Sur. Co., 374 Ill. App. 3d 1, 

13 (1st Dist. 2007).

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excluding membership club prices from U&C. See supra, note 7. Plaintiffs’ own Complaint thus 

reflects that the insurers were on inquiry and actual notice of Walgreens’ practices for years. 

1. Plaintiffs have failed to plead that Walgreens made any false statements.

As the Complaint and case law make clear, the U&C price is a creature of contract. See

Compl. ¶¶ 6, 39, 41–43, 45, 81; United States ex rel. Schutte v. Supervalu, Inc., No. 11-3290, 2020 

WL 3577996, at *10–11 (C.D. Ill. July 1, 2020); Corcoran v. CVS Health Corp., No. 15-cv-03504, 

2017 WL 3873709, at *20 (N.D. Cal. Sept. 5, 2017) (“Plaintiffs’ claims of misrepresentations rely 

on defendants breaching their contract with the PBMs and TPPs . . .”), rev’d, 779 F. App’x 431, 

433 (9th Cir. 2019) (still recognizing essential role of PBM contracts in evaluating plaintiffs’ fraud 

claims). Crucially, the Complaint also makes clear that separate contracts between Walgreens and 

Plaintiffs’ PBMs define the U&C prices that Walgreens transmits to the PBMs. Id. ¶¶ 41–43, 122. 

No matter how Plaintiffs defined U&C in their own PBM contracts, or what Plaintiffs supposedly 

believe pharmacies should report, the Walgreens-PBM agreements could contain different (but 

valid, binding) terms defining U&C contrary to Plaintiffs’ alleged expectations. 

Instead of alleging with any specificity how Walgreens’ contracts with Plaintiffs’ PBM 

agents define U&C, Plaintiffs plead on information and belief that Prime’s contract adopted 

“industry standards” that bind Walgreens. See Compl. ¶¶ 43, 45.16 Plaintiffs have pleaded 

themselves out of court, however, by alleging facts making clear that there is no industry standard 

definition of U&C. Indeed, Plaintiffs point to a laundry list of rules, regulations, manuals, and their 

own contracts with their PBMs, each carving in or out different benefits, promotions, and discounts 

from the definition of U&C. See, e.g., Compl. ¶¶ 36, 39, 49. Of course, none of these authorities—

including Prime’s Pharmacy Provider Manual, see id. ¶ 44—establishes the definition of U&C in 

 16 Plaintiffs fail entirely to plead how Walgreens’ contracts with OptumRx or Express Scripts define U&C.

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the only context that is actually relevant here: Walgreens’ contractual relationship with the PBMs 

that served as Plaintiffs’ agents. 

2. Plaintiffs have failed to plead that Walgreens knew that Plaintiffs expected 

reported U&C prices to include PSC prices.

Plaintiffs do not allege that they ever told Walgreens, directly or through their agents, that 

U&C reporting must include discount club prices. Instead, Plaintiffs speculate that Walgreens 

somehow knew that Plaintiffs’ agreements with their PBMs contained such a requirement. Id. ¶ 39. 

Specifically, Plaintiffs contend that they each “contracted [with their PBMs] to receive the benefit” 

of certain U&C discounts. Id. Yet Plaintiffs do not assert that Walgreens had any reason to know 

the terms of Plaintiffs’ highly confidential PBM contracts—documents that Plaintiffs filed under

seal in this case. See Mot. for Leave to File Compl. under Seal., ECF No. 1-4, at ¶¶ 4–5. Without 

any factual basis to assert that Walgreens was even aware of Plaintiffs’ purported contractual 

expectations about U&C pricing, Plaintiffs’ fraud theory fails. United States ex rel. Proctor v. 

Safeway Inc., No. 11-cv-3406, 2020 WL 3132397, at *25 (C.D. Ill. June 12, 2020) (pharmacy did 

not recklessly or knowingly submit false U&C prices because law governing U&C requirements 

was unclear); Schutte, 2020 WL 3577996, at *9–11.

3. Plaintiffs have failed to plead—and cannot plead—that they reasonably 

relied on the reported U&C prices.

Plaintiffs acknowledge that Walgreens has marketed PSC and advertised its price list since 

2007. Compl. ¶ 60, 62, id., Ex. 1. Plaintiffs even used Walgreens’ publicly available PSC 

formularies to create the exemplary-transaction list attached to the Complaint. See id. ¶¶ 62, 73 & 

n.45. Plaintiffs’ Complaint also cites a similar case filed more than a decade ago, and notes that a 

putative nationwide class of third-party payors (which, if certified, would include Plaintiffs) sued 

Walgreens in this District in 2017 based on a “similar factual and legal nexus” that Walgreens 

misreported U&C prices. Id. ¶¶ 30, 66. Yet, Plaintiffs (sophisticated insurers) continue to 

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reimburse Walgreens for allegedly fraudulent U&C prices to this very day.17 Id. ¶ 94. Thus, by 

their own allegations, Plaintiffs were on at least inquiry notice of Walgreens’ alleged scheme years 

ago. Plaintiffs cannot have reasonably relied on any purported misstatement or omission from 

Walgreens, nor can Walgreens’ allegedly inaccurate reporting of U&C prices be material to 

Plaintiffs’ payment decisions. Bass v. Prime Cable of Chi., Inc., 284 Ill. App. 3d 116, 127–28 (1st 

Dist. 1996). Plaintiffs continue to pay purportedly fraudulent claims since discovering the “truth.” 

4. Plaintiffs have failed to plead the circumstances constituting the alleged 

fraud with particularity, as required under Rule 9(b).

Plaintiffs fail to satisfy Rule 9(b)’s heightened pleading standard because they allege 

general actions taken by “Walgreens,” a term they define to lump together both WBA and 

Walgreens. See Compl. ¶ 23; see also Sears v. Likens, 912 F.2d 889, 893 (7th Cir. 1990). Plaintiffs’ 

claims also fail under Rule 9(b) because Plaintiffs acknowledge that the “apparent overcharges” 

in Exhibit 2 might not really be overcharges, see id. ¶ 73 n.45—and, tellingly, Plaintiffs do not 

include the U&C definition from the Walgreens–PBM contracts that govern the transactions. See

Pirelli, 631 F.3d at 444–46.

B. Plaintiffs’ Fraudulent Concealment and Negligent Misrepresentation Claims 

(Counts 2 & 3) Also Fail Because Walgreens Owed Plaintiffs No Duty

Plaintiffs fail to allege with specificity that Walgreens owed Plaintiffs any duty to 

communicate accurate U&C information to their PBMs. Plaintiffs also allege that they suffered 

only economic harm, see Compl. ¶¶ 125, 127, so the Moorman doctrine bars Plaintiffs’ negligent 

 17 Despite their investigation and filing this action, Plaintiffs have paid and continue to pay Walgreens’ 

reimbursement claims knowing that Walgreens excludes discount club pricing from U&C. The voluntary 

payments doctrine thus forecloses Plaintiffs’ claims, which also fail for lack of reliance and materiality. 

McIntosh v. Walgreens Boots Alliance, Inc., 2019 IL 123626, ¶ 22. While Plaintiffs quibble that Walgreens 

did not fully publicize its alleged scheme before this case, the law does not require that level of detail to 

defeat Plaintiffs’ fraud claim. See Int’l Star Registry of Ill. v. ABC Radio Network, Inc., 451 F. Supp. 2d 

982, 990 (N.D. Ill. 2006). Plaintiffs were on notice of the supposed fraud long ago; yet they sued only after 

the government collected money from pharmacies under a “U&C” theory that simply does not apply here. 

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misrepresentation claim. See Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69, 90–91 (1982); 

see also Forth v. Walgreen Co., No. 17-cv-2246, 2018 WL 1235015, at *7 (N.D. Ill. Mar. 9, 2018).

C. Plaintiffs’ Unjust Enrichment Claim (Count 9) Must Be Dismissed

Plaintiffs’ unjust enrichment claim merely repeats Plaintiffs’ flawed allegations that 

Walgreens “fraudulently inflated the U&C prices.” Compl. ¶ 186. When “an unjust enrichment 

claim rests on the same improper conduct alleged in another claim, then the unjust enrichment 

claim will be tied to this related claim” and the claims will rise—and, in this case, fall—together. 

Cleary v. Philip Morris Inc., 656 F.3d 511, 517 (7th Cir. 2011).

III. RULE 12(B)(6) – PLAINTIFFS’ STATUTORY CLAIMS FAIL (COUNT 4–8)

A. Plaintiffs’ UTPA Claim Is Untimely (Count 4)

The statute of limitations ran out on Plaintiffs’ Oregon Unlawful Trade Practices Act 

(“UTPA”) claim. Because Plaintiffs invoke diversity jurisdiction, Compl. ¶ 31, the Court applies 

the statute of limitations the forum state would use. Pirelli Armstrong Tire Corp. v. Walgreen Co., 

No. 09 C 2046, 2009 WL 2777995, at *6 (N.D. Ill. Aug. 31, 2009). When, as in this case, a foreign 

statute creates a cause of action, Illinois’s courts apply that statute’s limitation period. See id. As 

a result, Oregon’s one-year statute of limitations governs Plaintiffs’ claim, Or. Rev. Stat. 

§ 646.638(6), and starts to run when the plaintiff “knew or should have known” about the allegedly 

unlawful trade practice. Saenz v. Pittenger, 78 Or. App. 207, 211–12 (1986) (quotations omitted).

Plaintiffs’ own allegations demonstrate that the statute of limitations started running no 

later than January 2019, more than a year before Plaintiffs filed this suit. Plaintiffs knew or should 

have known about the alleged fraud years ago, see Part II.A.3, but Plaintiffs make clear that 

January 15, 2019, was “[s]ignificant[].” Id. ¶ 2. That day, Walgreens settled government claims 

related to its U&C prices. Id. Plaintiffs allege that they were “damaged by the same fraudulent 

course of conduct.” Id. (emphasis added). When the district court unsealed that settlement on 

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January 24, 2019, see supra, note 9, Plaintiffs discovered, or with reasonable diligence should have 

discovered, the alleged fraud. See, e.g., Saenz, 78 Or. App. at 211–12. Because Plaintiffs’ 

allegations establish the elements of a statute-of-limitations defense, the Court should dismiss their 

claim. See Bonnstetter v. Chicago, 811 F.3d 969, 974 (7th Cir. 2016). 

Plaintiffs erroneously allege that the class-action tolling doctrine from American Pipe & 

Construction Co. v. Utah, 414 U.S. 538 (1974), saves their claim. Compl. ¶ 95. But the putative 

Forth class did not even assert a UTPA claim, see Compl., No. 17-cv-2246, ECF 1, and “American 

Pipe applies only when the earlier class suit involves exactly the same cause of action subsequently 

asserted.” Scott v. Ill. Bell Tel. Co., 169 F. Supp. 3d 845, 853 (N.D. Ill. 2016) (quotations & 

alterations omitted, emphasis added). “Because [Plaintiffs’ UTPA claim] did not appear in the 

[Forth] Complaint, [it is] time barred, and American Pipe tolling cannot save [it].” In re: Dairy 

Farmers of Am., Inc. Cheese Antitrust Litig., No. 9-cv-3690, 2015 WL 3988488, at *30 (N.D. Ill. 

June 29, 2015); accord Zarecor v. Morgan Keegan & Co., Inc., 801 F.3d 882, 888 (8th Cir. 2015). 

B. Plaintiffs Lack Standing to Bring an ICPA Claim (Count 5)

Only plaintiffs “in a contractual relationship with the party alleged to have acted unfairly 

or deceptively” have standing under the Idaho Consumer Protection Act (“ICPA”). Taylor v. 

McNichols, 149 Idaho 826, 846 (2010). Plaintiffs make clear that they do not contract directly with 

Walgreens. Compl. ¶¶ 39, 41–43, 122. A complaint that fails to allege “a contractual relationship” 

between the parties “fail[s] to state [a] claim[] for relief under [ ] ICPA.” Taylor, 149 Idaho at 846. 

C. Plaintiffs’ ICFA and IUDTPA Claims Fail Because Plaintiffs Have Failed to 

Plead an Illinois Nexus (Counts 7–8)

The Illinois Uniform Deceptive Trade Practices Act (“IUDTPA”) and Consumer Fraud and 

Deceptive Business Practices Act (“ICFA,” and with IUDTPA, the “Illinois Acts”) do “not have 

extraterritorial effect.” Avery v. State Farm Mut. Auto Ins. Co., 216 Ill. 2d 100, 185 (2005); U.S. 

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Bd. of Oral Implantology v. Am. Bd. of Dental Specialties, 390 F. Supp. 3d 892, 909–11 & n.11 

(N.D. Ill. 2019). As a result, the Illinois Acts apply only “if the circumstances that relate to the 

disputed transaction occur primarily and substantially in Illinois.” Avery, 216 Ill. 2d at 187. 

Plaintiffs do not, however, plead that any of Plaintiffs’ members filled prescriptions in Illinois, see

Compl., Ex. 2, that Walgreens reported any U&C prices to PBMs in Illinois, that the PBMs 

processed reimbursement requests in Illinois, that the PBMs sent adjudicated claims to Illinois 

entities, or that Plaintiffs felt any injury in Illinois. In fact, Plaintiffs are legal entities of 

Washington, Missouri, Oregon, Idaho, and Utah incorporated specifically to sell insurance in those 

states. Id. ¶¶ 14–20. Courts routinely dismiss ICFA and IUDTPA claims like Plaintiffs’ that fail to 

allege a sufficient Illinois nexus. See, e.g., Tarzian v. Kraft Heinz Foods Co., No. 18 C 7148, 2019 

WL 5064732, at *2–3 (N.D. Ill. Oct. 10, 2019).

D. Plaintiffs’ Statutory Claims (Counts 4–8) Fail on the Merits

For all the reasons explained above, Plaintiffs failed to plead plausibly that Walgreens 

committed any unfair or deceptive acts, as required under UTPA, ICPA, Washington’s Consumer 

Protection Act (“WCPA”), ICFA,18 and IUDTPA.19 Plaintiffs also failed to plead that Walgreens 

proximately caused Plaintiffs harm.20 Plaintiffs’ UTPA21 claim fails because Plaintiffs do not 

 18 Plaintiffs also allege that Walgreens violated 815 ILCS 505/2B.3. See Compl. ¶ 176. But Plaintiffs’ 

Complaint does not suggest that PSC customers received anything other than the exact discounts Walgreens 

promised, and “Walgreens’ intent for offering those discounts,” id., is irrelevant. 815 ILCS 505/2B.3(3).

19 See Idaho Code § 48-608(1); Wash. Rev. Code § 19.86.020; Or. Rev. Stat. § 646.638(1); 815 ILCS 505/2; 

815 ILCS 510/3. 

20 See Idaho Code § 48-608(1); Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 

2d 778, 794 (1986) (en banc); Pearson v. Philip Morris, Inc., 358 Or. 88, 125–26 (2015); Avery, 216 Ill. 2d 

at 199–203.

21 A plaintiff must specifically identify which subsections of the UTPA the defendant allegedly violated. 

Fleshman v. Wells Fargo Bank, N.A., 27 F. Supp. 3d 1127, 1139–40 (D. Or. 2014). Plaintiffs fail to identify 

any particular subsection here, however, alleging only that “Walgreens’ business acts and practices . . . 

constitute unconscionable and unlawful trade practices under [UTPA].” Compl. ¶ 129. Because “the 

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specifically allege which particular statutory provisions Walgreens allegedly violated; their ICPA 

claim fails for the same reason.22 Nor have Plaintiffs adequately pleaded that Walgreens’ conduct 

impacted consumers, which further dooms their ICFA and WCPA claims.23 Because Plaintiffs 

now know the truth about Walgreens’ U&C prices (and have continued to pay claims based on 

those prices for years despite that knowledge), Plaintiffs also are not entitled to injunctive relief 

under UTPA, WCPA, or IUDTPA (the last of which makes available only injunctive relief).24

IV. ALL CLAIMS AGAINST WBA MUST BE DISMISSED

Nowhere does the Complaint allege that WBA ever filled any prescriptions, submitted any 

reimbursement claims, advertised any programs, reported any U&C prices, or signed any contracts 

with Plaintiffs’ agents. Nor could it. WBA is a “parent holding company” that derives all of its 

profits from its wholly owned subsidiaries, including Walgreen Co. Compl. ¶ 22. As the Complaint 

fails to and cannot allege any actions taken directly by WBA, all claims against WBA must be 

dismissed. See, e.g., Sears, 912 F.2d at 893; Surfside Non-Surgical Orthopedics P.A. v. Allscripts 

Healthcare Solutions, Inc., No. 18 C 566, 2019 WL 2357030, at *5 (N.D. Ill. June 4, 2019).

CONCLUSION

For the foregoing reasons, Defendants respectfully request that the Court dismiss Plaintiffs’ 

Complaint with prejudice under Rules 12(b)(7) and 12(b)(6).

 

allegations in the [ ] Complaint do not identify which subsections of O.R.S. 646.608(1) are alleged to have 

been violated,” Plaintiffs’ UTPA claim fails and should be dismissed. Fleshman, 27 F. Supp. 3d at 1141.

22 When a complaint fails to allege a “specific prohibited unfair or deceptive practice,” it “fail[s] to state a 

claim . . . under the ICPA.” McNichols, 149 Idaho at 846. Plaintiffs’ Complaint does not allege any specific 

violations of ICPA’s “specific prohibited actions,” and so must be dismissed. Id.

23 See Serv. Corp. Int’l v. Stericycle, Inc., No. 19 C 1960, 2020 WL 43017, at *5 (N.D. Ill. Jan. 4, 2020); 

Hangman Ridge, 105 Wash.2d at 790–91 (“Ordinarily, a breach of a private contract affecting no one but 

the parties to the contract is not an act or practice affecting the public interest,” as required under WCPA).

24 Int’l Star Registry, 451 F. Supp. 2d at 990–91; see also In re 100% Grated Parmesan Cheese Mktg. & 

Sales Practices Litig., 348 F. Supp. 3d 797, 811 (N.D. Ill. 2018).

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Dated: September 29, 2020 Respectfully submitted,

/s/ Jeffrey J. Bushofsky

Jeffrey J. Bushofsky

Laura G. Hoey

Charles D. Zagnoli

ROPES & GRAY LLP

191 North Wacker Drive

32nd Floor

Chicago, Illinois 60606

Tel: (312) 845-1200

Fax: (312) 845-5522

Jeffrey.Bushofsky@ropesgray.com

Laura.Hoey@ropesgray.com

Charles.Zagnoli@ropesgray.com

Attorneys for Defendants Walgreen Co. and 

Walgreens Boots Alliance, Inc.

Case: 1:20-cv-01853 Document #: 90 Filed: 09/29/20 Page 22 of 23 PageID #:1583
CERTIFICATE OF SERVICE

I, Charles D. Zagnoli, hereby certify that the foregoing Memorandum in Support of 

Defendants Walgreen Co.’s & Walgreens Boots Alliance, Inc.’s Motion to Dismiss Case No. 1:20-

cv-4940 under Fed. R. Civ. P. 12(b)(7) & 12(b)(6) was electronically filed on September 29, 2020, 

and will be served electronically via the Court’s ECF Notice system upon the registered parties of 

record.

/s/ Charles D. Zagnoli

Charles D. Zagnoli

ROPES & GRAY LLP

191 North Wacker Drive

32nd Floor

Chicago, Illinois 60606

Tel: (312) 845-1200

Fax: (312) 845-5522

Charles.Zagnoli@ropesgray.com

Attorney for Defendants Walgreen Co. and 

Walgreens Boots Alliance, Inc.

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