Cz Services, Inc. v. Anthem Insurance Companies, Inc. ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 31 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CZ SERVICES, INC., DBA Carezone No. 22-16504
Pharmacy; CAREZONE PHARMACY,
LLC, D.C. No. 3:19-cv-04453-JD
Plaintiffs-Appellants,
MEMORANDUM*
v.
ANTHEM INSURANCE COMPANIES,
INC.; PREMERA BLUE CROSS; BLUE
CROSS AND BLUE SHIELD OF KANSAS
CITY,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
James Donato, District Judge, Presiding
Argued and Submitted August 15, 2023
Anchorage, Alaska
Before: MURGUIA, Chief Judge, and PAEZ and NGUYEN, Circuit Judges.
CZ Services, Inc. and CareZone Pharmacy, LLC (collectively, the
“Pharmacies”) appeal the district court’s order dismissing this action for lack of
personal jurisdiction over Anthem Insurances Companies, Inc., Blue Cross and
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Blue Shield of Kansas City, and Premera Blue Cross (collectively, the “Insurers”)
in the Northern District of California for violating California and Tennessee laws
when Express Scripts, Inc. (“Express Scripts”), the Insurers’ pharmacy benefit
manager, terminated the Pharmacies from its pharmacy network. We have
appellate jurisdiction under 28 U.S.C § 1291. We review dismissal for lack of
personal jurisdiction de novo and factual findings that underlie the jurisdictional
determination for clear error. Freestream Aircraft (Berm.) Ltd. v. Aero L. Grp.,
905 F.3d 597, 602 (9th Cir. 2018). We affirm.
State law determines the bounds of personal jurisdiction, and California’s
long-arm statute allows courts to exercise personal jurisdiction to the full extent
permissible under the U.S. Constitution. Daimler AG v. Bauman, 571 U.S. 117,
125 (2014). Accordingly, this court “inquire[s] whether [the exercise of personal
jurisdiction] comports with the limits imposed by federal due process.” Id.For a court to exercise jurisdiction over a non-resident defendant, the
defendant must “have certain minimum contacts . . . such that the maintenance of
the suit does not offend traditional notions of fair play and substantial justice.”
Williams v. Yamaha Motor Co. Ltd., 851 F.3d 1015, 1022 (9th Cir. 2017) (quoting
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). For a court to have
specific jurisdiction over a defendant, two requirements must be satisfied: (1) the
defendant must take “some act by which it purposefully avails itself of the
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privilege of conducting activities within the forum State” and (2) the plaintiff’s
claims “must arise out of or relate to the defendant’s contacts with the forum.”
Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024–25 (2021)
(cleaned up). At issue is the second requirement. “Arise out of” requires
“causation,” while “relate to” “contemplates that some relationships will support
jurisdiction without a causal showing.” Id. at 1026. However, this “does not mean
anything goes” as it concerns “relate to.” Id. “Relate to” continues to
“incorporate[] real limits, as it must adequately protect defendants foreign to a
forum.” Id.
The injury the Pharmacies complain of—being terminated from Express
Scripts’ pharmacy benefits network—is too attenuated to the Insurers’ contacts
with California to maintain personal jurisdiction. Although the Insurers insure
many members residing in California who the Pharmacies allege may have been
affected by the termination, those contacts are related to the Insurers’ contacts with
its members, not to the Insurers’ contacts with Express Scripts or with the
Pharmacies themselves. These attenuated contacts do not meet the required “close
connection” necessary to find specific jurisdiction. Yamashita v. LG Chem, Ltd.,
62 F.4th 496, 506 (9th Cir. 2023).
Additionally, we reject the Pharmacies’ argument that their claims “arise out
of or relate to” the Insurers’ conduct in California because Express Scripts acted as
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the Insurers’ agent. “Agency is the fiduciary relationship that arises when [a
principal] manifests assent to [an agent] that the agent shall act on the principal’s
behalf and subject to the principal’s conduct, and the agent manifests assent or
otherwise consents so to act.” Am. Airlines, Inc. v. Mawhinney, 904 F.3d 1114,
1124 (9th Cir. 2018) (quoting Restatement (Third) Of Agency § 1.01 (2006)). “To
establish an agency relationship, ‘[t]he principal must in some manner indicate that
the agent is to act for him, and the agent must act or agree to act on his behalf and
subject to his control.’” Id. (quoting Edwards v. Freeman, 212 P.2d 883, 884 (Cal.
1949)).
To establish an agency relationship, the Pharmacies point to provisions in
the Insurers’ agreements with Express Scripts that allow Express Scripts to
maintain and monitor networks on the Insurers’ behalf, give the Insurers’ limited
ability to request pharmacies be added to or terminated from the network, or
require written approval before Express Scripts makes material changes to the
network. However, none of the contractual provisions that the Pharmacies rely on
show that the Insurers had “the right to substantially control” Express Scripts’
activities. Williams, 851 F.3d at 1025. Because Express Scripts was not acting as
an agent of the Insurers when it terminated the Pharmacies from its network, there
is no jurisdiction over the Insurers based on any agency relationship.
AFFIRMED.
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