MSBA Antitrust Law Section. May 7, 2008. Reverse Payments. Courts have developed different standards for evaluating the legality of “reverse payment” settlements (RPSs) of pharmaceutical patent infringement litigation filed in accordance with the Hatch-Waxman Act
MSBA Antitrust Law Section
May 7, 2008
Bundling, Exclusive Dealing and Microsoft’s European Vacation
Quantity discounts by supplier conditioned on buyer/customer’s combined purchases of two or more products
Challenges are: restraint under Sherman §1, monopoly or attempt under §2, or improper discount under Clayton §3
LePage’s, Inc. v. 3M, 324 F.3d 141 (3rd Cir. 2003)
Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir. (Or.) Feb 01, 2008)
Plaintiff is McKenzie-Willamette Hospital, Defendant is PeaceHealth (3 hosp) – only hospitals in Lane County Oregon
1) Allocate all discounts and rebates attributable to the entire bundle to the competitive product:
- Is competitive product being sold below its incremental cost? (if no, you’re OK)
2) If yes, is there antitrust injury?
- if yes, we have a violation
12(b)(6) dismissal “appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the ground on which it rests”
(As with bundling claims) challenges generally are: restraint under Sherman §1, monopoly or attempt under §2, or improper discount under Clayton §3
NicSand, Inc., v. 3M Co., 507 F.2d 442 (6th Cir. 2007)
Below: Dist Ct dismissed complaint for lack of AT standing and lack of AT injury
Competitors exclusive agreements with retailers for supply of automotive sandpaper did not result in antitrust injury when the following were true:
“we must reject claims under Rule 12(b)(6) when antitrust standing is missing.”
AT claimant must put forth factual allegations plausibly –not just possibly- suggesting antitrust injury, not simply a “naked assertion”
AT laws protect competition, not competitors
(AT laws used to protect competition, says a gloomy dissent)
1. Refusal to disclose and authorize the use of interoperability information
2. TyingStandard for tying under Article 82 of EC Treaty:
“We are not alone in finding the opinion confusing. … The issues raised by Twombly are not easily resolved and likely will be a source of controversy for years to come.” Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008).
Limestone Development Corp. v. Village of Lemont, Ill., 520 F.3d 797 (7th Cir. 2008).
Twombly teaches “that a defendant should not be forced to undergo costly discovery unless the complaint contains enough detail, factual or argumentative, to indicate that the plaintiff has a substantial case.”
“[t]he Supreme Court ha[s] warned against permitting a plaintiff ‘with a largely groundless claim to simply take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value, rather than a reasonably founded hope that the [discovery] process will reveal relevant evidence.” (emphasis added)
“In a complex antitrust or RICO case a fuller set of factual allegations than found in the sample complaints in the civil rules' Appendix of Forms may be necessary to show that the plaintiff's claim is not ‘largely groundless.’ If discovery is likely to be more than usually costly, the complaint must include as much factual detail and argument as may be required to show that the plaintiff has a plausible claim.” (Citations omitted.)
Kendall v. VISA U.S.A., Inc., 518 F.3d 1042 (2008).
“We hold that Appellant’s First Amended Complaint failed to plead evidentiary facts [!] sufficient to establish a conspiracy, and we affirm [dismissal without leave to amend under Rule 12(b)(6)].
At least for the purposes of adequate pleading in antitrust cases, the Court specifically abrogated the usual “notice pleading” rule, found in Federal Rule of Civil Procedure 8(a)(2) and Conley v. Gibson, which requires only “a short and plain statement of the claim showing that the pleader is entitled to relief,” to “give the defendant fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atlantic, 127 S.Ct. at 1964, 1968.
“The Court also suggested that to allege an agreement between antitrust co-conspirators, the complaint must allege facts such as a ‘specific time, place, or person involved in the alleged conspiracies’ to give a defendant seeking to respond to allegations of a conspiracy an idea of where to begin. Id. at 1970 n. 10.”
“Appellants do not allege any facts to support their theory that the Banks conspired or agreed with each other or with the Consortiums to restrain trade. Although appellants allege the Banks ‘knowingly, intentionally and actively participated in an individual capacity in the alleged scheme’ to fix the interchange fee or the merchant discount fee, this allegation is nothing more than a conclusory statement. There are no facts alleged to support such a conclusion. Even after the depositions taken, the complaint does not answer the basic questions: who, did what, to whom (or with whom), where, and when?” (Emphasis added.)