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Walgreen Co v. Premier Products of America

February 17, 2012



This cause is before the Court pursuant to Defendants' Motion to Dismiss Amended Complaint (Doc. # 24), filed on November 11, 2011. Plaintiff filed a Response in Opposition to the Motion on November 21, 2011. (Doc. # 25). For the reasons that follow, the Court denies the Motion.

I. Factual Background and Procedural History

On February 3, 2003, Plaintiff Walgreen Co. (an Illinois corporation) and Defendant Premier Products of America, Inc. (a Florida corporation) entered into an Electronic Data Interchange Trading Partner Agreement (hereafter, the "Trading Agreement"). (Doc. # 23 at ¶¶ 1, 2, 7). Subsequently, on July 28, 2008, Walgreens and Premier entered into another agreement, the "Electronic Payments Agreement." Id. at ¶ 10. Both Agreements (in addition to other exhibits) are attached to the Amended Complaint.

Walgreens alleges that Premier began submitting electronic invoices to Walgreens on August 21, 2009, for H1N1 facemasks. (Doc. # 23 at ¶ 15). Pursuant to the Trading Agreement and the Electronic Payments Agreement, "those invoices were prepaid in full upon receipt." Id. In September and October 2009, "multiple Walgreens stores across the country began to contact the Walgreens' accounts payable department to dispute the charges resulting from the Premier H1N1 facemask invoices." Id. at ¶ 16. With respect to such facemasks, some stores indicated that the facemasks were never actually delivered; other stores indicated that such facemasks were never even ordered. Id.

Walgreens conducted an audit regarding the facemasks and determined that Premier had been paid for products not actually delivered. Id. at ¶¶ 17-18. Accordingly, on October 22, 2009, Walgreens debited from Premier's electronic account a total of $889,944, representing the full value of all invoices Premier had submitted on August 21, 2009. Id. at ¶ 18.

On November 30, 2009, Premier, through Defendants Thomas Carlin and Scot Monette (presumably the officers of Premier), submitted documents to Walgreens that persuaded Walgreens that $251,155 worth of goods reflected in the August 21, 2009, invoices had actually been delivered. Id. at ¶ 19. Walgreens credited this amount to Premier. Id.

In December 2009, and January 2010, a new controversy regarding Premier products arose. Id. at ¶ 23. Premier submitted invoices to Walgreens for H1N1 facemasks and for a product known as "Spaceballs." Id. Walgreens paid Premier $907,423.62. Id. However, after further investigation, Walgreens determined that Spaceballs "was a product that no Walgreens store ever ordered, and that Premier never actually delivered to any Walgreens store." Id.

Walgreens removed Premier from its Electronic Data Interchange Program system and, in April 2010, Walgreens "debited Premier's account for $1,305,008.41, reflecting the value of all of Premier's [Electronic Data Interchange] billing from August 24, 2009, through January 18, 2010." Id. at ¶ 28. However, from April through September 2010, Carlin and Monette sent documents to Walgreens that eventually convinced Walgreens to credit Premier's account in the amount of $854,505.88. Id. at ¶ 30. As it turns out, the documentation leading to the $854,505.88 credit was "false" and "fraudulent." Id. at ¶ 36. As explained by Walgreens: "Based upon the false documentation and misrepresentations made by Premier, by and through Monette and Carlin, it is clear that Premier made a conscious effort to wrongfully bill Walgreens for products Walgreens did not order or were not shipped." Id. at ¶ 39. Furthermore, "[o]nce Walgreens uncovered Premier's initial layer of deception, Premier added another layer of deception by submitting invoices for a fake product (Spaceballs) and fabricating proof of delivery documentation." Id. "As of January 17, 2011, Premier's deceit had cost Walgreens $2,097,452.36, an amount paid by Walgreens for nothing." Id. at ¶ 41.

Walgreens submits:

For more than a year before Walgreens uncovered their fraud and ceased doing business with Carlin, Monette and Premier, Carlin and Monette, through Premier, submitted more than 1,500 false invoices and/or false proofs of delivery to Walgreens headquarters in Illinois and dozens of Walgreens stores in multiple states across the country in their scheme to obtain unlawful monies from Walgreens.

Id. at ¶ 48. Walgreens also alleges that Carlin and Monette undertook such actions in furtherance of a RICO enterprise. Id. at ¶ 39.

On April 14, 2011, Walgreens filed its Complaint against Defendants and on October 24, 2011, filed its Amended Complaint (Doc. # 23). The Amended Complaint contains the following counts: (1) federal RICO against all Defendants; (2) state RICO against all Defendants; (3) civil theft against all Defendants; (4) violation of the Florida Deceptive and Unfair Trade Practices Act against all Defendants; (5) breach of contract against Premier; (6) fraudulent misrepresentation against all Defendants; (7) negligent misrepresentation against Premier; and (8) unjust enrichment against Premier.

Defendants seek dismissal of counts one and two, which allege violation of federal ...

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