A federal appeals court Wednesday affirmed a lower court decision to dismiss a lawsuit filed by Walmart against the Justice Department, a lawsuit filed after federal official considered criminal charges over alleged mishandling of opioids dispensed by Walmart pharmacies.
The opinion, issued by a three-judge panel of the Fifth Circuit U.S. Court of Appeals, affirmed the February decision by District Judge Sean Jordan in the Eastern District of Texas that Walmart’s action was barred by sovereign immunity and want of subject-matter jurisdiction. And in Wednesday’s opinion affirming that decision, the appeals court said that Walmart had not “demonstrated the existence of a ripe case or controversy” worthy of consideration by the courts beyond the sovereign-immunity issue.
Last December — two months after Walmart filed the action — the Justice Department filed their own lawsuit in Delaware, charging Walmart and its pharmacies with wholesale violations of the Controlled Substances Act in connection with their handling of opioids in Texas and several other states. The lawsuit is considered one of the largest and most significant legal actions to emerge from efforts to cope with the nation’s on-going opioid crisis.
Walmart and its lawyers did not immediately respond to requests for comment on the opinion. Nor did DOJ officials.
In its lawsuit Walmart had sought a series of declaratory judgments stating that the opioid-dispensing and -distribution practices in Walmart’s pharmacies did not violate the CSA, complaining that the mention of possible criminal charges against the company during the course of the investigation amounted to misconduct by East Texas prosecutors with whom Walmart had sought a negotiated outcome to the ongoing federal investigation.
Walmart had attempted to persuade the Fifth Circuit panel, which included Judges Patrick Higginbotham, Jerry Smith and James Ho, that alleged misconduct by DOJ prosecutors had amounted to appealable sanctions against Walmart.
But in Wednesday’s 16-page opinion, Judge Smith wrote that settlement negotiations had nothing to do with “agency action” — an element that had to be met to waive sovereign immunity under the Administrative Procedure Act.
“Walmart cites several ‘rules,’ but most of them derive not from official publications but from positions allegedly taken by the government in settlement negotiations with Walmart,” Judge Smith wrote in the unanimous opinion. “Though there is no room for disagreement about precisely what satisfies the definition of ‘rule,’ it surely does not include negotiating positions.”
Moreover, the very existence of the DOJ’s enforcement action in the District of Delaware corroborates the Fifth Circuit’s position that the Eastern District action is now unnecessary.
“When this case was brought, the government had no unequivocal position, but now it has one — and that position is, by Walmart’s own telling, materially different from the one Walmart challenges,” Judge Smith wrote. “At its core, ripeness is a matter of timing that serves to prevent courts from entangling themselves in cases prematurely. If it was not clear when the case was brought, it is certain now that the lack of a clear position on the part of the government rendered the case premature at that time. Because it challenges a series of positions that the government does not quite take, Walmart fails to show the ‘actual controversy’ that is needed for a declaratory judgment to be fit for judicial decision.”
Judge Higginbotham concurred with the majority opinion, but dissented that Section III, which addressed Walmart’s arguments over the “rules” and “sanctions” elements of its agency action argument, was unnecessary.
In the Delaware action, a motion to dismiss hearing before U.S. District Judge Colm Connolly had been scheduled for November 22 but was canceled after the parties agreed to stay the hearing while awaiting the resolution of two U.S. Supreme Court cases that could affect the litigation.
For a history of the Walmart investigation in East Texas and the subsequent resignation and whistleblower complaint by the lead civil prosecutor, Joshua Russ, click here.