Tuesday, May 11, 2010





False Tooth Makers’ Claims Against Monopolist Cleared for Trial, Leading to Settlement

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

Artificial tooth maker Dentsply International, Inc. could have engaged in unlawful monopolization through practices that included tooth swaps with dental product dealers and the offering of loyalty rebates to exclusive dealers, the federal district court in Harrisburg, Pennsylvania, has ruled.

The two dental supply manufacturers asserting the claim, Univac Dental Company and Lactona Corporation, presented sufficient evidence of damages from the tooth swaps and dealer exclusivity policies—which included Dentsply’s maintenance and enforcement of a policy prohibiting the dealers from adding competitors’ artificial teeth to their product lines—to survive summary judgment, the court stated.

At the outset, the court noted that the complaining manufacturers were not entitled to a preclusive finding that Dentsply’s actions injured them based upon an appellate court’s determination—in a government enforcement action, U.S. v. Dentsply Int’l, Inc.—that the tooth maker’s actions harmed all of its competitors, including the corporate predecessor of both Univac and Lactona, Universal Dental Company (2005-1 Trade Cases ¶74,706).

Causation and Damages

Collateral estoppel did not operate to resolve the issues of causation and damages in the case because, in the prior action, the issues—as they related to Univac and Lactona—were not fully litigated. Moreover, the determination of any issues related to them was not essential to that prior judgment. Thus, they were required to prove damages in the present case.

The court rejected Dentsply’s argument that Univac and Lactona would not be able to show that Dentsply’s actions foreclosed a sufficiently significant portion of the market because they were still able to maintain access to dealers through a grandfather exception to the exclusivity policy.

No legal authority required an individual competitor to prove that its own access to the market had been foreclosed in order to make a showing that it was injured or that the challenged practices severely restricted the market’s ambit, the court explained.

Anticompetitive, Injurious Actions

The complaining manufacturers did not fail to meet their burden of showing that Dentsply took action that was both anticompetitive and injurious to them within the statute of limitations period. Although the evidence was not conclusive, it was sufficient to present the issue to a finder of fact, the court said.

A contention that it would be improper to consider evidence of actions directed not only toward Univac and Lactona specifically, but also that infringed competition in the relevant market generally, was without merit.

Evidentiary Matters

In the same opinion, the court also ruled on several evidentiary matters intended to clear the path to trial. It confirmed that a magistrate judge’s refusal to grant preclusive effect to several proposed factual findings was proper. In addition, the court declined to reject several of the magistrate’s recommended findings regarding the effects of Dentsply’s conduct on the basis that they were allegedly inapplicable or misleading. Any potential for one particular finding to mislead the jury could be alleviated by the defendant’s evidence and arguments, in the court’s view.

The fact that several other findings referred to competitors other than Univac and Lactona did not render those findings misleading, inaccurate, or immaterial. A reference to events occurring outside the limitations period applicable to the suit did not warrant another finding’s rejection.

Amount of Damages

In a separate ruling issued on April 27, the court found that expert testimony offered to establish the amount of damages suffered by the complaining manufacturers was sufficiently reliable and fit to the facts to be admitted into evidence. Objections by the defendant to the testimony were more directly related to its probative value than to its admissibility.

he testimony was based upon a proper foundation, the court said, and the expert’s calculation of an estimated amount of damages without regard to causation or any other elements of liability was “perfectly acceptable.”

Settlement

One day after the latter ruling on expert testimony, the parties reportedly reached an agreement to avoid going to trial. On April 29, the presiding judge in the matter, Christopher Conner of the U.S. District Court for the Middle District of Pennsylvania, signed a dismissal order allegedly acknowledging that the matter had been settled.

None of the involved companies has issued a statement divulging the terms of the settlement, but the dismissal order purportedly noted that either side could reinstate the action within 60 days if the settlement does not get consummated.

The March 31 and April 27 rulings in Univac Dental Co. v. Dentsply International, Inc., Civil Action No. 1:07-CV-0493, appears at 2010-1 Trade Cases ¶76,998 and ¶76,999.

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