The Richmond Register

April 6, 2014

Lawsuit against former pharmacy owners dismissed

Corporate exec admits claim untrue

By Sarah Hogsed
Register News Writer

RICHMOND — A lawsuit brought by drug store chain CVS against a local family who owned M&M Drug Store has been dismissed.

The lawsuit, associated counterclaims and appeals were dismissed March 25 with prejudice, meaning CVS is barred from filing another case on the same claims, according to U.S. District Court documents.

“(The lawsuit) was not well-founded from the beginning,” said attorney James T. Gilbert, who represented John and Mary McKinney.

Gilbert also said the chain “over-reached” with its claims against the family.

CVS had alleged that the McKinneys, who operated the M&M Drug Store at 110 Big Hill Avenue, misrepresented who owned the building when they sold the business’s inventory and prescription files to the chain in May 2011.

However, a CVS executive admitted during a deposition in the case that the McKinneys had disclosed and provided documents to the company that they leased or rented the pharmacy property from the Louise McCord Wagers Trust, according to court documents

The trust, which also was named as a defendant in the suit, is run by John McKinney’s mother, Eleanor McCord McKinney.

“John Newman, CVS’s Regional Director of Pharmacy Acquisitions, admitted he was told the ‘family’ owned the property, and he incorrectly assumed that meant the McKinneys,” according to court documents. “... he also admitted that his affidavit stating the McKinneys repeatedly represented that they owned the property at the time they signed the agreement was not a true statement.”

When the McKinneys sold their business to CVS, they signed an agreement not to compete, directly or indirectly, with CVS drugstores for 10 years within a 10-mile radius.

A new pharmacy, Madison Drug, opened in the same location in November 2012, and CVS also had alleged in the lawsuit that the McKinneys violated the noncompete agreement, although the new business is not run by the McKinneys.

All claims against Madison Drug were dropped earlier in the case.

CVS attempted to obtain a temporary injunction from the federal court to shut down Madison Drug until the lawsuit was resolved. However, U.S. District Judge Karl Forester in September ruled against the motion, and he also dismissed the chain’s claim of unfair competition made against the McKinneys, Madison Drug (also known as Spencer Drug) and the trust.

Sarah Hogsed can be reached at shogsed@richmondregister.com or 624-6694.