Monday, January 16, 2012

County Not a Proper Plaintiff to Pursue Federal Antitrust Claims in Multi-District Suit

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

A California county lacked standing to pursue a federal antitrust claim seeking injunctive relief against producers of plasma-derivative protein therapies and a trade association that allegedly conspired to restrict out and raise prices, the federal district court in Chicago has ruled.

The federal antitrust claim was dismissed. However, the remaining issues involving state-law claims were held in abeyance, pending a determination on the court’s subject matter jurisdiction and the propriety of keeping the case as part of multi-district litigation, consisting of almost 20 actions brought on behalf of direct and indirect purchasers of plasma-derivative protein therapies.

The county was an indirect purchaser. It operated a medical center through which it administered a county-wide health care system, whose medical center indirectly purchased plasma-derivative protein therapies. The county claimed that it was forced to purchase these therapies either from distributors who had purchased the therapies from manufacturers or from group purchasing organizations (GPOs) that had negotiated contracts with manufacturers on behalf of their members, including the county.

The county alleged a core antitrust injury. It claimed that the defendants conspired to reduce output, thereby forcing the county to pay higher prices. However, it was not a “proper plaintiff” to maintain the antitrust action.

Standing was lacking based on the considerations delineated in the U.S. Supreme Court’s 1983 decision in Associated General Contractors of California, Inc. v. California State Council of Carpenters, 1983-1 Trade Cases ¶65,226, 459 U.S. 519:

(1) The causal connection between the violation and the harm;

(2) The presence of improper motive;

(3) The type of injury and whether it was one Congress sought to redress;

(4) The directness of the injury;

(5) The speculative nature of the damages; and

(6) The risk of duplicate recovery or complex damage apportionment.
Because the county, as an indirect purchaser, sought only injunctive relief, there was no threat of multiple lawsuits or duplicative recoveries. Thus, the standing analysis was limited to the presence of improper motive, the causal connection between the violation and the harm, and the directness of the injury. An improper motive was sufficiently alleged.

In addition, the county alleged a causal connection between the Sherman Act violation and its purported harm based on its alleged payment of higher prices by virtue of the conspiracy to reduce output. However, there were more direct victims of the alleged conspiracy to vindicate the public interest and they were actively pursuing their claims, seeking damages and the same injunctive relief sought by the county.

The court did not consider whether the Associated General Contractors factors applied to each of the various state antitrust claims the county sought to bring, and whether the county failed to state a claim for relief. The questions had to be put off until after the court addressed two issues: whether the court had subject matter jurisdiction, and whether the dismissal of the federal antitrust claim had any effect on whether the particular case should continue as part of the multi-district litigation.

Article III Standing

The court rejected the producers' assertions that the county failed to establish Article III standing to pursue its non-California state-law claims on behalf of indirect purchasers of plasma-derivative therapies. Thus, those claims were not dismissed for lack of Article III standing.

The county’s efforts to certify an indirect purchaser class would proceed later. Although the county did not specifically allege that it suffered a personalized injury due to the defendants’ alleged violations of other states’ laws, the county provided sufficient general allegations of its own individualized injury for its non-California state-law claims. It alleged that it was forced to purchase plasma-derivative protein therapies on the spot market, which required the county to purchase the therapies “from anyone in the nation that had a sufficient supply.”

While the complaint was silent about how and where the alleged spot market transactions took place, the allegation of spot market purchases was sufficient. Ultimately, however, the county would be required to support its standing with more than mere “unadorned speculation” at the summary judgment stage, the court noted.

The January 9, 2012, decision, In Re: Plasma-Derivative Protein Therapies Antitrust Litigation, appears at 2012-1 Trade Cases ¶77,751.

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