1 MICHAEL A. HACKARD, ESQ.

(SBN 71067) FfLED

Supsrior Court Of CaSifonliia,
hackard(^hackardlaw. com
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MICHAEL D. LANE, ESQ. (SBN 239517)
mlane(^hackardlaw. com 03/17/2011
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MICHAEL A. HACKARD, a Professional Law Corporation
4 10630 Mather Boulevard ^"i J Depijty
Mather, CA 95655 Case Numbtiir;
5 Tel: (916)313-3030
34-2011-0OOS361.1.
6 Fax:(916)226-5177
7 ARCHIE C. LAMB, JR., ESQ. (To Apply as Pro Hac Vice)
alamb 1 (^vzw .blackberry.net
8 P. O. Box 2088
Birmmgham, AL 35201
9 Tel: (205)324-4425
10 Fax: (205) 324-4649
11 Attomeys for Plamtiff Michael Desrys
12 SUPERIOR COURT OF THE STATE OF CALIFORNIA
13 COUNTY OF SACRAMENTO
14
15 MICHAEL DESRYS, as an Individual and on Case No.
Behalf of All Others Similarly Situated,
16 CLASS ACTION
Plaintiff,
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vs. COMPLAINT FOR EQUITABLE
18 AND MONETARY RELIEF
MEDCO HEALTH SOLUTIONS, INC., a
19 Delaware corporation, FEDERICO
BUENROSTRO, Individually, KURATO Jury Trial Demanded
20 SHIMADA, Individually, CHARLES VALDES,
21 Individually, and DOES 1-100, Inclusive,
22 Defendants.

23 PARTIES

24 1. Plaintiff MICHAEL DESRYS ("Plaintiff) resides in Sacramento County,

25 Califomia.

26 2. Plaintiff is informed and believes and thereon alleges that, at all relevant times.

27 Defendant MEDCO HEALTH SOLUTIONS, INC. ("Medco") was and is a Delaware corporation

28 licensed to do business in the State of California. Plaintiff is informed and believes and thereon

COMPLAINT FOR EQUITABLE AND MONETARY RELIEF

 1 alleges that Medco transacts business, has agents and is doing business in Sacramento County and

2 other counties in Califomia.

3 3. Plaintiffis informed and believes and thereon alleges that Defendant FEDERICO

4 BUENROSTRO is an individual residing in Caiifomia.

5 4. Plaintiff is informed and believes and thereon alleges that Defendant KURATO

6 SHIMADA is an individual residing m Califomia.

7 5. Plaintiff is informed and believes and thereon alleges that Defendant CHARLES

8 VALDES is an individual residing in Califomia.

9 6. Plaintiff is ignorant of the tme names and capacities of the Defendants sued herein

10 as Does 1 through 100, inclusive, and therefore sue those Defendants, and each ofthem, by such

11 fictitious names. Plaintiff will amend this complaint to allege their tme capacities when

12 ascertained. Plaintiffis informed and believes and thereon alleges that all such fictitiously named

13 Defendants, and each ofthem, are responsible in some manner for the occurrences herein alleged

14 and that Plaintiffs damages herein alleged were proximately caused by Defendants' acts.

15 7. Plaintiffis informed and believes and thereon alleges, that at all relevant times

16 Defendants, and each of them, were acting on behalf of and as the agent, servant, employee,

17 and/or representative of each other with the consent, knowledge, and permission of each of the

18 remaining Defendants, and were acting within the scope and purpose of said agency,

19 employment, authority, and/or representation.

20 JURISDICTION AND VENUE

21 8. The Court has proper jurisdiction over this action under §410.10 ofthe Califomia

22 Code of Civil Procedure and Business & Professions Code §§17200, et seq.

23 9. Jurisdiction over Medco is proper because it has purposely availed itself of the

24 privilege of conducting business activities in Califomia and because it currently maintains

25 systematic and continuous business contacts with this State, and has many thousands of customers

26 who are residents of the State of Califomia and who do business with Defendant Medco from

27 locations across this State.

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COMPLAINT FOR EQUITABLE AND MONETARY RELIEF
 1 10. Venue is proper in this Court because many Class Members did business with

2 Medco and engaged in transactions in this County, Medco engaged in transactions in this County,

3 and because Medco has received substantial profits fi-om customers who engaged in transactions

4 here.

5 STATEMENT OF FACTS

6 11. Plaintiff is a member of the Califomia Public Employees' Retirement System

7 ("CalPERS") health plan that provides medical benefits for Plaintiff, including pharmacy

8 prescription benefits.

9 12. Plaintiff is informed and believes and thereon alleges that in or about May 2004
10 ("May 2004 Meeting"), CalPERS' then-CEO, Federico Buenrostro ("Buenrostro"), convened

11 with Alfred ViUalobos ("ViUalobos"), a former member of CalPERS' Board of Administration,

12 and David Snow ("Snow"), the Chairman and CEO of Medco, at ViUalobos' Lake Tahoe home in

13 Nevada ("ViUalobos Home") to discuss changing CalPERS' pharmacy benefit management

14 company to Medco.

15 13. Plaintiffis informed and believes and thereon alleges that in or about September

16 2004 ("September 2004 Meeting"), Buenrostro, Snow, and ViUalobos retumed to the ViUalobos

17 Home and were joined by three other members of CalPERS' Board of Administration, Charles

18 Valdes ("Valdes"), Kurato Shimada ("Shimada"), and Robert Carlson ("Carlson"), to fiirther

19 discuss changing CalPERS' pharmacy benefit management company to Medco.

20 14. Plaintiffis informed and believes and thereon alleges that soon after the May 2004

21 Meeting, Medco agreed to pay ViUalobos $4 million to secure a pharmacy benefit management

22 contract with CalPERS.

23 15. Plaintiffis informed and believes and thereon alleges that in or about November

24 2004, ViUalobos paid for Buenrostro's wedding at the ViUalobos Home, including lodging for

25 Buenrostro's wedding guests and other related expenses ("ViUalobos Gifts").

26 16. Plaintiffis informed and believes and thereon alleges that over the following year,

27 Snow continued to pnvately meet with one or more of ViUalobos, Buenrostro, Valdes, Shimada,

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COMPLAINT FOR EQUITABLE AND MONETARY RELIEF
 1 and/or Carlson to continue their discussions regarding changing CalPERS' pharmacy benefit

2 management company to Medco ("Post-September 2004 Medco Meetings").

3 17. In or about October 18, 2005, CalPERS' Health Benefits Committee convened at a

4 regularly scheduled meeting to recommend to the fiill CalPERS Board which entity to award the

5 pharmacy benefit management contract ("October 2005 Officiai CalPERS Meeting"). Plaintiff is

6 informed and believes and thereon alleges that Buenrostro, Valdes, Shimada, and Carlson

7 attended the October 2005 Official CalPERS Meeting.

8 18. Plaintiff is informed and believes and thereon alleges that at the October 2005

9 Official CalPERS Meeting, Valdes moved to recommend that the pharmacy benefit management

10 contract be awarded to Medco, and that Valdes and Carlson voted in favor of said

11 recommendation.

12 19. Plaintiff is informed and believes and thereon alleges after the October 2005

13 Official CalPERS Meeting, Medco paid ViUalobos $1 million, the final instaUment oftheir initial

14 $4 million agreement. Plaintiffis informed and believes and thereon alleges Medco agreed to pay

15 ViUalobos an additional $20,000 a month as an ongoing retainer.

16 20. Plaintiffis informed and believes and thereon alleges neither Buenrostro, Valdes,

17 Shimada, nor Carlson informed the Committee at or prior to the October 2005 Official CalPERS

18 Meeting about the May 2004 Meeting, September 2004 Meeting, Post-September 2004 Medco

19 Meetings (collectively, the "Clandestine Medco Meetings") and/or the ViUalobos Gifts.

20 21. Plaintiff is informed and believes and thereon alleges by or around July 1, 2006,

21 Medco entered into a 3-year, $26 million pharmacy benefit management contract with CalPERS

22 ("Medco PBM Contract"). Plaintiff is informed and believes and thereon alleges that the Medco

23 PBM Contract was extended twice and was increased to $48 million.

24 22. Plaintiff is informed and believes and thereon alleges that after the Medco PBM

25 Contract, Plaintiff incurred increased charges for medications provided through Medco.

26 CLASS ACTION ALLEGATIONS

27 23. Plaintiff brings this action against Defendants on behalf of himself and all others

28 similarly situated in Caiifomia to recover damages against Defendants for causes of action ansing
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COMPLAINT FOR EQUITABLE AND MONETARY RELIEF
 1 from Defendants' unlawful, unfair, or wrongful business acts and/or practices. Plaintiff and the

2 Califomia Class assert causes of action against Defendants for unfair frade practices under Bus. &

3 Prof. Code § 17200, et seq.

4 24. The Class is defined as:

5 All individuals who are members of CalPERS' organization health plan that were provided

6 prescription benefits from Medco dunng or after 2006.

7 25. The following persons shall be excluded from the Class: (1) Defendants and their

8 subsidiaries and affiliates; (2) all persons who make a timely election to be excluded from the

9 proposed Class; (3) govemmental entities; or (4) the judge(s) to whom this case is assigned and

10 any immediate family members thereof.

11 26. Plaintiff reserves the nght to modify or amend the Class definition before the Court

12 determines whether certification is appropriate.

13 27. The Class for whose benefit this action is brought is so numerous that joinder of all

14 Class members is impracticable. Plaintiffis informed and believes and thereon alleges there are

15 hundreds of thousands^ of individuals in the Class.

16 28. The claims of Plaintiff are typical of the claims of the Class in that the

17 representative Plaintiff, like all Class members, was a member of CalPERS' organization health

18 plan, purchased medications through Medco during or after 2006, and incurred increased charges
19 for said medications provided through Medco.

20 29. The representative Plaintiff, like all Class members, has been injured in fact by

21 Defendants' misconduct.

22 30. Furthermore, the factual basis of Defendants' misconduct as described above are

23 common to all Class members and represent a common thread of illegal, unfair and/or deceptive

24 misconduct resulting in injury to all members ofthe Class.

25 31. There is a well-defined commimity of interest in the questions of law and fact

26 affecting the members of the Class as a whole. These questions of law and fact common to the

27 Class predominate over any questions affecting solely individual members, and include whether

28 Defendants' activities related to Medco's pursuit and acquisition of the Medco PBM Contract
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COMPLAINT FOR EQUITABLE AND MONETARY RELIEF
 1 violated Cal. Bus. & Prof. C. § 72000, et seq, for which Plaintiff and the other members of the

2 Class are entitled to recover.

3 32. Plaintlffs claims raise predominant common issues for all Class members as they

4 anse out ofthe same acts and practices of Defendants.

5 33. Plaintiffhas suffered the harm alleged, and Plaintiffhas no irteconcilable interests

6 antagonistic to the interests of any other Class member.

7 34. Plaintiff is committed to the vigorous prosecution of this action and has retained

8 competent counsel experienced in the prosecution of class actions. Accordingly, Plaintiff is an

9 adequate representative of the Class and will fairly and adequately protect the interests of the

10 Class.

11 35. To the extent it is an element for class certification, a class action is superior to

12 other available methods for the fair and efficient group-wide adjudication ofthis confroversy and

13 provides substantial benefits. Since the amount ofeach individual Class member's claim is small

14 relative to the complexity ofthe litigation, and due to the financiai resources of Defendants, no

15 Class member could afford to seek legal redress for some if not all ofthe claims alleged herein.

16 36. Therefore, absent a class action, the Class members will continue to suffer losses

17 and Defendants' violations ofthe law will proceed without remedy.

18 CAUSES OF ACTION
19 FIRST CLAIM FOR RELIEF:

20 Violations of Bus. & Prof. Code §17200, et seq.

21 (Against all Defendants)

22 37. Plaintiffs hereby incorporate by reference all of the foregoing paragraphs as if set

23 forth in full herein.

24 38. Defendants' conduct described herein violates Business and Professions Code

25 § 17200 (The Unfair Competition Law or "UCL") in the following respects:

26 (a) Defendants' engagement in the Clandestine Medco Meetings and ViUalobos

27 Gifts, and/or Medco's paying ViUalobos $4 million to engage in the

28 Clandestine Medco Meetings and ViUalobos Gifts, as alleged above,

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COMPLAINT FOR EQUITABLE AND MONETARY RELIEF
 1 constitutes unlawful activity prohibited by Business and Professions Code

2 section 17200, et seq. The actions of Defendants in Medco's pursuit ofthe

3 Medco PBM Contract constitute false, unfair, fraudulent and deceptive

4 business practices, within the meaning of Business and Professions Code

5 section 17200, et seq.

6 (b) As a result of Defendants' violations of the UCL, Plaintiffs have paid

7 excessive amounts of money for their medications purchased through

8 Medco and suffered and will continue to suffer injury in fact and a loss of

9 money or property.

10 39. Pursuant to Califomia Business and Professions Code §17203, Plaintiff and

11 members ofthe Class seek, and are therefore entitled to:

12 (a) an Order requiring that Medco cease performance of the Medco PBM

13 Confract;

14 (b) restitution of all amounts paid to Medco or its agents;

15 (c) equitable relief pursuant to Cal. Code of Civil Procedure §384;

16 (d) pre-judgment interest at the highest rate allowable by law; and

17 (e) payment oftheir attomeys' fees and costs pursuant to, inter alia, Cal. Code

18 ClV. Proc. §1021.5, the common fund and private Attomey General

19 doctnnes.

20 PRAYER FOR RELIEF

21 WHEREFORE, Plaintiff, on behalf of himself and the members of the Class he seeks to

22 represent, prays forjudgment as follows as appropriate for the particular Cause of Action:

23 1. Preliminary and permanent injunctive relief enjoining Medco from performing the

24 Medco PBM Contract;

25 2. Restitution ofall excessive amounts paid to Medco or its agents by Plaintiffand the

26 Class, including restitution equal to disgorgement ofthe lU-gotten gains derived from Defendants'

27 misconduct;

28 3. Actual damages in an amount according to proof;

COMPLAINT FOR EQUITABLE AND MONETARY RELIEF

 1 4. Punitive and exemplary damages in an amount according to proof;
2 5. Pre-judgment interest at the legal rate permitted by law;
3 6. The costs and disbursements incuned by Plaintiff in connection with this action,
4 including reasonable attomeys' fees pursuant to, inter alia, California Code of Civil Procedure

5 §1021.5; and

6 7. Such other and further relief as the Court deems just and proper.
7 JURY DEMAND
8 Plaintiffand the Class demand a trial by jury on all claims so tnable.
9 Dated: March 17, 2011 MICHAEL A. HACKARD, a PLC
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Attomeys for Plaintiff, Michael Desrys
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COMPLAINT FOR EQUITABLE AND MONETARY RELIEF