Walmart defends suit v. DOJ, denies intrusion on prosecutors’ discretion


By Alison Frankel, Reuters 

January 7, 2021


(Reuters) - Can a prospective Justice Department target use a preemptive declaratory judgment suit to shape the parameters of the government’s case? Or must defendants wait to be sued in an enforcement action to contest DOJ’s interpretation of the law?


That’s one of the key questions in a fierce and highly consequential fight between Walmart and the U.S. government. The Justice Department, as you probably recall, filed an enforcement action against Walmart in federal court in Delaware last December, alleging that the company violated the Controlled Substances Act by failing to police opioids prescriptions.


The government’s complaint, which cites more than 230,000 overdose deaths that have occurred in the 10-year opioid epidemic, is seeking maximum penalties for thousands of prescriptions that DOJ contends Walmart should not have filled. Walmart has called the suit “misguided and misleading,” contending that its pharmacists have refused to fill thousands prescriptions from “questionable doctors” but are prohibited from interfering in doctor-patient relationships.


But before DOJ sued Walmart, Walmart sued the government. The company filed a declaratory judgment complaint in Sherman, Texas, last October, requesting a ruling that DOJ’s interpretation of the CSA is wrong. Walmart’s strategy in the declaratory judgment suit was fascinating. Its lawyers at Jones Day described a pressure campaign by DOJ in which Texas prosecutors allegedly used the threat of a criminal indictment in an attempt to extract “a massive civil penalty” from the company. Even after DOJ higher-ups formally declined to bring criminal charges, Walmart said, the government appeared to be moving forward with plans to bring a civil case. Walmart said it wanted the court to issue an interpretation of the CSA in light of DOJ’s looming suit. And it wanted that interpretation fast: The company moved for summary judgment even before the government filed an appearance in the case.


Obviously, if Walmart’s intention was to obtain a quick ruling to ward off the DOJ’s case, the plan failed. Walmart filed in October. The Justice Department brought its suit in December. As I’ve previously reported, DOJ outmaneuvered Walmart by moving to dismiss the company’s suit and persuading U.S. District Judge Sean Jordan to stay briefing on Walmart’s summary judgment motion until he decided whether to toss the case. Walmart, in other words, won’t be able to wield a Texas declaratory judgment that its pharmacists acted within the scope of the CSA in the early stages of litigation in DOJ’s suit.


But can the company continue to seek such a judgment at all – or must the Texas case be dismissed, as DOJ has requested? Walmart filed its opposition brief yesterday. Its argument: The company wasn’t attempting to interfere with prosecutorial discretion when it originally filed the suit and still needs a ruling from the court in Texas to inform its future conduct, which isn’t at issue in DOJ’s enforcement action in Delaware.


And if Judge Jordan’s ruling on the scope of the CSA just happens to impact the DOJ suit, Walmart said, that doesn’t mean its Texas case is “a forbidden attack on prosecutorial discretion.”


The government certainly portrayed the Walmart suit as an attempt to interfere with its enforcement power in its dismissal motion. Keep in mind: The government moved for dismissal of the Texas case before it actually sued Walmart in Delaware. So DOJ described Walmart’s bid for a declaratory judgment as a “dramatic expansion of judicial review of prosecutorial activity.”


And if Judge Jordan allowed Walmart to move ahead with its preemptive attack on the government’s investigation, DOJ said, he would open the door to...