Eighth Circuit

Eighth Circuit decisions

Standard for preliminary injunction in merger matters

Federal Trade Commission v Sanford Health

In Federal Trade Commission v Sanford Health, 1 the Eighth Circuit considered an appeal by the merging defendants, Sanford Bismark (Sanford), an integrated healthcare system that operates an acute care hospital and multiple clinics in the Bismark area, 2 and Mid Dakota Clinic, PC (Mid Dakota), a multi-specialty physician group that includes approximately 23 adult primary care physicians, six pediatricians, eight OB/GYN physicians and five general surgeons. The Federal Trade Commission (FTC) challenged the merger under section 7 of the Clayton Act, alleging that it would substantially lessen competition in four types of physician services in Bismarck: general surgeon, pediatric, adult primary care and OB/GYN. The defendants sought to overturn the district court’s decision granting a preliminary injunction.

The potential merger arose after Mid Dakota offered itself for sale in 2015. Sanford and Catholic Health, the third competitor in Bismarck, both submitted purchase proposals. Mid Dakota and Catholic Health executed a letter of intent but after Catholic Health terminated the deal, Mid Dakota began negotiations with Sanford. The FTC alleged that if the companies merged, Sanford would have the following market shares in Bismarck: 99.8 per cent of general surgeon services, 98.6 per cent of pediatric services, 85.7 per cent of adult primary care physician services and 85.6 per cent of OB/GYN physician services. 3

In determining the plaintiffs’ likelihood of success, the district court relied on the burden-shifting method from Baker Hughes. 4 On appeal, the defendants argued that the district court inappropriately shifted the burden of persuasion to the defendants ‘when it required them to produce rebuttal evidence that “clearly shows” that no anticompetitive effects were likely.’ 5 Specifically, the defendants criticized the district court’s citation to Philadelphia National Bank, 6 noting that the DC Circuit in Baker Hughes found that the Supreme Court, without overruling Philadelphia National Bank, had ‘lightened the evidentiary burden on a section 7 defendant.’ 7 The Eighth Circuit found no error because the district court ‘followed the analytical framework of Baker Hughes,’ specified that ‘[t]he FTC has the burden of persuasion at all times,’ and that, because the plaintiffs ‘presented strong evidence of monopolization or near monopolization in each service line, . . . defendants [had] to make a strong presentation in rebuttal.’ 8

The district court employed a hypothetical monopolist test to determine that commercial health insurers in Bismarck would accept an SSNIP 9 rather than market a health insurance plan in Bismarck without physicians providing adult primary care, pediatrician, OB/GYN and general surgeon services. The Court noted that the district court’s determination was supported by analysis of claims data and testimony from all three insurers, 10 including Sanford Health Plan, the insurance provider within Sanford’s system. 11 The defendants argued that the district court failed to account for Blue Cross’ dominant position; a provider in North Dakota could not impose a price increase on Blue Cross. The Eighth Circuit noted that the defendants’ arguments misstated the application of the hypothetical monopolist test. When applied to insurers, the test ‘evaluates whether an insurer could avoid a price increase by contracting with physicians who offer services that are outside of the proposed service markets or located in a region outside the proposed geographic market.’ 12 Blue Cross’ market power would not change its ability to find substitutes because the testimony was that there were no functional substitutes.

Next, the Court considered the defendants’ arguments in rebuttal: ‘(1) market concentration has no relationship to bargaining power in the North Dakota healthcare market, (2) Catholic Health was poised to enter the market to compete with Sanford after the merger, (3) merger efficiencies offset the potential to harm consumers, and (4) Mid Dakota’s weakened condition justified the merger.’ 13 First, the defendants claimed that Blue Cross sets reimbursement rates using a statewide pricing schedule meaning the merger would not impact prices, and criticized the district court for interpreting the argument as a powerful buyer defense, which, according to the defendants, improperly shifted the burden of persuasion to them. The Eighth Circuit rejected that argument, finding that, regardless of how the argument is described, the district court placed the burden of persuasion on the FTC and, more importantly, that evidence supported the relationship between market concentration after the merger and Blue Cross’ leverage including evidence that Blue Cross was forced to modify contract terms with a near-monopoly provider in another area of the state. The Eighth Circuit also credited the district court’s findings that Catholic Health would not be able to enter the market quickly due to difficulties recruiting doctors and countering Sanford’s name recognition and that the only efficiency unique to the merger did not offset the merger to near-monopoly. 14 Finally, the Court found that the district court appropriately rejected the defendants’ argument that Mid Dakota was a weakened competitor because the record showed that Mid Dakota was financially healthy and minutes from a shareholder meeting showed that the motivation to sell was high share value. 15 As a result, the Eighth Circuit affirmed the district court’s decision to grant a preliminary injunction.

This case affirms the use of Baker Hughes’ methodology to analyze a merger in the context of a preliminary injunction in the Eighth Circuit and makes clear that the Eighth Circuit is aligned with the DC Circuit’s view of Philadelphia National Bank. In addition, the case provides useful guidance to litigants around the analysis of healthcare markets.

District court’s review of expert testimony

In re Wholesale Grocery Products Antitrust Litigation

In In re Wholesale Grocery Products Antitrust Litigation, 16 the plaintiffs, two corporations that operate supermarkets in the Greater Boston area, sued defendants – SuperValu and C&S Wholesale Grocers, Inc (C&S), two of the largest grocery project wholesalers in the United States – alleging that they ‘conspired by way of an Asset Exchange Agreement (AEA) to allocate territory and customers.’ The Eighth Circuit considered the plaintiffs’ appeal of decisions granting the defendants’ summary judgment and Daubert motions and denying the plaintiffs’ motion for class certification.

SuperValu and C&S were competitors in New England, but C&S did not compete with SuperValu in the Mid-West. The AEA at issue arose when SuperValu’s primary competitor in the Mid-West declared bankruptcy and C&S announced its intention to acquire the debtor’s assets. Under the AEA, SuperValu would receive the debtor’s assets and would transfer its New England operations to C&S. The class plaintiffs alleged that the AEA constituted an agreement to allocate territory and customers and allowed each defendant to charge supracompetitive prices. 17 To prove antitrust injury, the plaintiffs’ expert used a competitive benchmark – the largest purchaser of wholesale groceries in New England – and argued that the change in price it paid was a ‘reasonable reflection of the change in price paid by the independent grocers absent the AEA.’ 18 The district court found the benchmark analysis unreliable because it was premised on ‘an unfounded assumption that independent retailers’ charges . . . followed the same pattern [as the benchmark] absent the AEA’ and that the expert’s analysis also failed because he failed to control for non-conspiratorial factors. 19

The plaintiffs argued that the district court’s decision should be overturned because their expert’s qualifications were not questioned and his methodology – benchmarking – is a recognized tool for proving antitrust injury. The Eighth Circuit rejected that argument as an incorrect statement of law. 20 Noting that the district court rejected ‘the foundation of the assumption underlying the application of the method employed by [the expert] on these facts,’ the court held that the district court appropriately exercised its gatekeeping role under Daubert because it determined that the expert’s assumptions were ‘insufficient to validate [his] opinion.’ 21 Despite the plaintiffs’ expert’s use of a regression and their recitation of the evidence and data on which he relied, the Court held that the district court did not abuse its discretion when it found that ‘[t]here was too great an analytical gap between the facts of the case and the benchmark chosen by [the expert] to support his opinion.’ 22

The Court also held that the district court did not abuse its discretion in rejecting the plaintiffs’ expert for failing to account for non-conspiratorial factors and factors that were unique to the benchmark in his analysis. The plaintiffs argued that the district court ‘should have assumed all factors affected the comparators equally unless there was proof that the factor at issue affected [the benchmark] and not [the plaintiffs].’ 23 Relying on the plaintiffs’ burden to establish the reliability of expert testimony ‘including a determination of whether other factors affected the pricing at issue, if only to eliminate those factors,’ the Court held that the plaintiffs needed to present evidence that the benchmark analysis controlled for all relevant factors. 24 Given the two issues, the Court held that the analysis ‘properly reflects the district court’s gatekeeping function mandated by Daubert and Rule 702’ and that the expert opinion was speculative. The Court went on to find that absent the expert report, the plaintiffs had insufficient evidence of antitrust injury to survive summary judgment and that the plaintiffs’ motion for reconsideration of class certification was moot.

This case establishes that a district court can and should look beyond an expert’s credentials and methodology to see if the expert’s work fits the facts of the case. Where an expert fails to account for differences between a benchmark and the comparator or fails to consider non-conspiratorial factors that could affect the expert’s analysis, the district court properly excludes the expert’s testimony under Daubert and FRE 702.

District court decisions

Pleading exclusive dealing and tying claims

Wholesale Alliance, LLC v Express Scripts, Inc

In Wholesale Alliance, 25 the plaintiff – Pharmacy First, a pharmacy services administrative organization (PSAO) – brought claims for exclusive dealing and tying 26 against the defendant, Express Scripts, a pharmacy benefit manager (PBM). PSAOs provide administrative support to pharmacies, including processing claims, operational support and contract negotiation with insurers and PBMs. As a PBM, Express Scripts administers prescription drug plans for various insurers and health benefit plans by creating pharmacy networks through which their clients’ members obtain prescription drugs at covered, discounted rates. Pharmacy First alleged that PBMs manage the prescription drug benefits of 90 to 95 per cent of US citizens with insurance and that Express Scripts controls 30 to 50 per cent of the nationwide PBM market. 27 ‘Pharmacies enter into contracts with Express Scripts to obtain access to its network of 83 million insured patients’ and frequently rely on PSAOs such as Pharmacy First for the contract negotiation. 28 Pharmacy First manages approximately 2,300 independent pharmacies nationwide. 29

Pharmacy First’s exclusive dealing and tying claims arose out of Express Scripts’ cancellation of Pharmacy First’s Services Agreement (Agreement). The Agreement recognized Pharmacy First’s ability to negotiate on behalf of its pharmacies and provided that Pharmacy First’s network of pharmacies would provide benefits to Express Scripts’ network. 30 The Agreement ‘could “be terminated by [Express Scripts] without cause upon at least thirty (30) days’ written notice.”’ 31 On 11 March 2018, Express Scripts terminated the Agreement without cause because Pharmacy First submitted an unsuccessful bid to an Express Scripts’ PSAO request for proposal (RFP) process. 32 Express Scripts invited Pharmacy First to engage in the RFP process again in the future.

Pharmacy First alleged that its termination was the result of an agreement between Express Scripts and four other PSAOs that Express Scripts ‘determined “best align[ed]” with its “organizational objectives” and “m[et]” Express Scripts’ “terms and conditions.”’ 33 As a result of its termination, Pharmacy First’s network of pharmacies had to negotiate directly with Express Scripts or use the PSAO services of one of the authorized PSAOs that controlled approximately 70 per cent of the market for PSAO services. Pharmacy First alleged that independent pharmacies who sought direct access to Express Scripts’ network faced the following burdens: ‘(i) punitively low and non-negotiable reimbursement rates; (ii) fees; (iii) network restrictions; (iv) administrative burdens; and (v) a narrowed list of Express Scripts’ selected reconciliation vendors who could be used to process electronic remittance advice from Express Scripts.’ 34 As a result of the termination, Pharmacy First alleged that it lost pharmacy customers. 35

In its motion to dismiss, Express Scripts argued that Pharmacy First failed to plausibly plead an agreement between itself and the four PSAOs to deal exclusively with one another, that Express Scripts had market power in the PSAO market, or that Express Scripts’ actions have harmed competition in the market or resulted in anticompetitive effects. 36 Pharmacy First responded that it pled facts in support of ‘an express or implied exclusive dealing agreement between Express Scripts and the four PSAOs to “cut off” access to Express Scripts’ network by Pharmacy First and the other 17 PSAOs that were terminated . . . .’ 37 Pharmacy First also pointed to allegations that Express Scripts’ action foreclosed competition in the PSAO-services market, which harms independent pharmacies by increasing their costs and denying them choice in PSAO services as plausibly supporting its antitrust injury.

As to the tying claim, Express Scripts argued that Pharmacy First failed to plausibly allege that Express Scripts ‘sells the purported “tying” product—access to Express Scripts’ network; that Express Scripts has a direct economic interest in the purported “tied” product—PSAO services from one of the four authorized PSAOs; or that Express Scripts conditions access to its network on using a PSAO.’ 38 Pharmacy First responded that Express Scripts’ services fee showed that Express Scripts ‘sells’ access to its network (the alleged tying product) and that it at least implicitly conditions access on the purchase of PSAO services from one of the four authorized PSAOs (the alleged tied product). 39 Further, Pharmacy First argued that its allegations regarding the substantial burdens placed on pharmacies trying to negotiate independently with Express Scripts proved that direct access is economically unviable, which forces the pharmacies to use the PSAOs. 40 Finally, Pharmacy First argued that the Eighth Circuit ‘does not require a defendant to have an economic interest in the tied product’ to state a tying claim but that Express Scripts did anyway because ‘consolidating the PSAOs . . . allows Express Scripts to reduce “administrative costs” and secure a “centralized reimbursement structure.”’ 41

The court first considered the plaintiff’s exclusive dealing claim under the per se rule. Noting that the per se rule for group boycotts is typically limited to horizontal agreements, the court found that Pharmacy First failed to plead concerted action among horizontal competitors because ‘[t]he complaint contains no facts plausibly demonstrating that the four PSAOs conspired . . . to enter into an agreement with Express Scripts to refuse to deal with [any of the PSAOs].’ 42 Rather, the complaint alleged that Express Scripts chose the PSAOs through a competitive RFP process (that Pharmacy First did not allege was rigged) because they ‘best aligned with its organizational objectives and met Express Scripts’ terms and conditions.’ 43 Thus, the complaint’s allegations were just as consistent with Express Scripts’ unilateral action. 44 Turning to the rule of reason analysis, the court found that the complaint alleged ‘the end result of an RFP process’ and failed to ‘plausibly suggest any collusion between Express Scripts and the four PSAOs to exclude [the other PSAOs].’ 45 Instead, the court found the conduct was consistent with Express Scripts’ unilateral determination about which contracts were best for its business and granted the motion to dismiss the exclusive dealing claim. 46

As to the tying claim, the court noted that Pharmacy First ‘[did] not plead a typical tying claim, nor [did] it plausibly [plead] facts bringing its atypical claim within the confines of the Sherman Act.’ 47 A tying claim typically asserts that the defendant refuses to sell the tying product without the tied product or, in cases where there is no explicit agreement, the defendant’s policy makes purchasing the tying and tied products together the only viable economic option. Pharmacy First did not plead an explicit agreement and alleged that approximately 20 per cent of independent pharmacies contracted directly with Express Scripts indicating that it was economically viable to do so. 48 As an additional basis for dismissing the tying claim, the court found that Pharmacy First failed to allege that Express Scripts had an economic interest in the PSAOs. Noting that neither the Supreme Court nor the Eighth Circuit had addressed the issue, the court recognized that ‘most courts require the tying product seller to have a direct economic interest in the sale of the tied product before an illegal tying arrangement can be found.’ 49 The court held that ‘if the tying product seller does not have an economic interest in the sale of the tied product, the seller is not attempting to invade the alleged tied product or service market in a manner proscribed by . . . the Sherman Act.’ 50 The court held that Pharmacy First’s allegations regarding Express Scripts’ reduced administrative costs and centralized reimbursement structure did not suggest the sort of ‘direct financial benefit’ required under the direct economic interest test. 51 Moreover, ‘[a]bsent such direct economic interest, Express Scripts would have little interest in reducing competition in the PSAO services market because . . . doing so would only increase the remaining PSAOs’ bargaining power against Express Scripts.’ 52 As a result, the court dismissed the tying claim.

Pleading an unreasonable restraint of trade

Sitzer v National Association of Realtors

In Sitzer v National Association of Realtors, 53 the plaintiffs, home sellers who listed their homes on four multiple listing service (MLS) databases in Missouri, alleged that the defendants – the National Association of Realtors (NAR) and a number of corporate real estate companies that operate brokerage services in the relevant MLS geographic regions (the Corporate Defendants) – imposed restrictions that inflated real estate commissions throughout Missouri in violation of section 1 of the Sherman Act as well as Missouri state antitrust statutes. 54 At issue was NAR’s adoption and implementation of the Adversary Commission Rule, which ‘requires all seller’s brokers to make blanket, unilateral and effectively non-negotiable offer [sic] of buyer broker compensation . . . when listing a property on a[n MLS].’ 55 The defendants filed motions to dismiss. 56

The court held that the plaintiffs had adequately pled an agreement among the defendants based on allegations that all of the Corporate Defendants require their subsidiaries 57 to ‘join NAR member groups, participate in the MLS, and adhere to all NAR-imposed listing rules and policies including the [Adversary Commission Rule].’ In addition, the plaintiffs alleged that various Corporate Defendant executives served in leadership or management positions at NAR or NAR’s local chapters, which, the plaintiffs argued and the court agreed, was sufficient to support the Corporate Defendants’ agreement to enforce NAR’s anticompetitive policies. 58

Turning to whether the complaint plausibly alleged an unreasonable restraint of trade, the court first held that the plaintiffs’ product market – ‘the bundle of services provided to buyers and sellers of residential real estate’ – and geographic market – the areas in which the relevant MLS databases operate – were sufficiently supported by the plaintiffs’ allegations, including how the residential market worked, the ubiquitous use of MLS and the limited alternatives to MLS. 59 Next, the court considered whether the plaintiffs stated a claim under the rule of reason. 60 The court dismissed the defendants’ arguments that the plaintiffs’ allegations demonstrate the pro-competitive nature of MLS as premature holding that it did not need to balance anticompetitive effects against pro-competitive justifications at the motion to dismiss stage. 61 Holding that the challenged conduct plausibly exerts an unreasonable restraint on trade, the court found that the market power of an MLS and ‘the fact that each MLS participant must adhere to the NAR listing rules or face professional sanctions and/or repercussions’ could ‘plausibly create a skewed compensation structure within the residential real estate market leading to inflated commissions.’ 62

Finally, NAR argued that the plaintiffs failed to allege a cognizable injury because the plaintiffs did not allege a failed attempt to negotiate a lower commission with their respective brokers. The plaintiffs argued that, to survive dismissal, all they needed to plead was that the Adversary Commission Rule was ‘a material cause, a substantial factor, or a proximate cause’ of their injuries. 63 The court determined that the plaintiffs’ allegations that the defendants’ ‘agreement forced them to pay higher total sales commissions when they sold their homes and forced them to pay higher buyer-broker commissions to induce buyer-brokers to show their homes to prospective buyers’ was the type of injury redressable under the antitrust laws, and that the plaintiffs’ allegations sufficiently linked their injury to NAR’s adoption of the Adversary Commission Rule. As a result, the court denied the motions to dismiss.

Pleading monopolization claims

Physician Specialty Pharmacy, LLC v Prime Therapeutics, LLC

In Physician Specialty, 64 the district court adopted the report and recommendation of the magistrate judge considering allegations that Prime Therapeutics (Prime), a pharmaceutical benefits manager for Blue Cross Blue Shield companies covering 93 per cent of large group health benefits in Alabama, 65 violated state and federal antitrust law when it unlawfully restrained trade in the Alabama specialty, mail order and retail pharmacy markets by vertically integrating 90 per cent of the market and excluding the plaintiff, Physician Specialty Pharmacy (PSP), from dispensing medications to Prime members. PSP also alleged that Prime conspired and agreed with Walgreens 66 to monopolize the same markets, and that Prime attempted to monopolize the same markets. 67

First, the court considered PSP’s allegation that Prime and Walgreens unreasonably restrained trade in violation of section 1 of the Sherman Act. PSP alleged that the per se standard was appropriate because it alleged that Prime and Walgreens conspired to exclude it from the marketplace and that Prime and Walgreens possessed ‘market power or exclusive access to an element essential to effective competition.’ 68 The court rejected a per se standard because Prime and Walgreens were not horizontal competitors; Prime is a customer/purchaser of pharmacies such as PSP and Walgreens. 69 Turning to the rule of reason analysis, the court held that PSP failed to plead an appropriate geographic market. 70 Although PSP alleged that the geographic market encompassed the entire state of Alabama because the state controls access to the relevant markets through licensing and regulation, the court found that PSP’s retail pharmacy market was too large given that both parties agreed that patients ‘rarely leave their locality to obtain mediations.’ 71 The court held that the Alabama specialty and mail order pharmacy market also failed because PSP failed to plead facts sufficient to show that the two services were interchangeable. In particular, the court found that Prime and Walgreens’ joint venture encompassing both services ‘does not mean that those services are interchangeable for the purpose of defining a plausible product market. It simply means that the joint venture offers two different service lines.’ 72 Finally, the court held that even if PSP had alleged plausible markets, it failed to demonstrate antitrust injury because ‘[c]onduct does not cause significant harm to a market when it is alleged to have impacted only a single party, even if the purpose of that conduct is retaliation.’ 73 Moreover, the court found that PSP failed to support its claim that it would have been excluded from the market because PSP only pled that it would be excluded from the large group health insurance market, which left another 4 million Alabama residents who receive health insurance through other types of insurers in Alabama. 74

Turning to the section 2 claims, the court held that PSP’s monopolization claims failed because PSP alleged the same failed markets as its section 1 claim. 75 Even if PSP pled a plausible market, PSP could still serve the over 4 million Alabama residents not covered by large group health insurance plans, which meant Prime lacked monopoly power. The court also found that PSP failed to plead facts showing Walgreens’ market share in the relevant markets or that the joint venture between Prime and Walgreens would result in a requirement that Prime members use Walgreens’ pharmacies. Noting that a plaintiff can also prove monopoly power through direct evidence, the court found that PSP failed to plead that prices would increase as a result of Prime’s conduct. 76 To the contrary, PSP’s pleading showed that it was free to continue operating in both markets by serving patients with other benefit plans and PSP failed to allege that Prime or Walgreens ‘lost out on short term profits or other benefits’ through its termination of PSP. 77 As a result, the court held that PSP’s monopolization claim failed to state a claim. 78

The court then went through a lengthy discussion about whether a plaintiff is required to plead a relevant market when asserting a conspiracy to monopolize claim. 79 Relying on the Supreme Court’s analysis in Spectrum Sports v McQuillan, 80 the court found that the ‘any part’ language in section 2 also applies to conspiracy to monopolize claims and therefore requires a plaintiff to plead a relevant market. After finding that a plaintiff must plead a relevant market in an attempted monopolization claim, the court held that PSP failed to plead plausible markets for all of the reasons given in its prior analysis. 81 Finally, the court rejected PSP’s claim under section 3 of the Clayton Act – that Prime and Walgreens’ prices were negotiated on the understanding that PSP would be excluded from the network – for its failure to establish a relevant market or show that market opportunities were limited after Prime and Walgreens established a joint venture. 82 The district court adopted Judge Leung’s report and recommendation and dismissed PSP’s complaint with leave to amend. 83

Pleading parallel conduct in price-fixing cases

In re Pork Antitrust Litigation

In In re Pork Antitrust Litigation, 84 a class action consolidating 13 separately filed law suits, three putative classes 85 alleged that the defendants, some of the nation’s leading pork producers and integrators, conspired to limit the supply of pork and fix prices in violation of state and federal law. 86 The pork industry is structured with relatively few players that are vertically integrated; the top four participants control almost 70 per cent market share and the top eight, all of whom were defendants, control over 80 per cent of the market. 87 In addition, the plaintiffs alleged that the market is subject to high barriers to entry thanks to the high costs related to building a facility and long-term contracts between the pork integrators and farmers who raise the pigs. 88 The plaintiffs also allege that pork is a commodity product; defendants are discouraged from raising prices individually because their products are largely interchangeable. 89 ‘Finally, the plaintiffs alleged that Defendants were motivated to enter into such an agreement because pork product prices were flat between 2000 and 2009, holding at less than $1.40 per pound.’ 90 The plaintiffs further alleged that the defendants carried out the conspiracy through public statements ‘emphasizing the need to cut production’ and information exchanged through Agri Stats, a benchmarking company. 91 The plaintiffs alleged that the defendants shared detailed metrics with one another through Agri Stats that, while anonymized, could be deciphered to identify the company reporting the data and thus provided a method for the defendants to enforce compliance with the conspiracy. 92 The plaintiffs alleged that the conspiracy was successful; pork production decreased and pork producers also increased pork exports resulting in prices increasing to up to $1.80 per pound in the consumer market and to $50 to $76.30 in the wholesale market.

Defendants filed three motions to dismiss – a consolidated motion to dismiss the Sherman Act claims for failure to state a claim, a consolidated motion to dismiss the indirect purchaser claims, and individual motions to dismiss the claims as to each defendant. After holding that the complaint should be considered under the per se standard as an agreement among competitors and recognizing that the plaintiffs admitted that they had not pled direct evidence of an agreement, the court considered whether the plaintiffs had adduced conscious parallelism and ‘plus factors sufficient to support a plausible inference of an agreement.’ 93 The court first acknowledged that the plaintiffs’ plus factors: ‘the collusive and constricted nature of the industry, the inelasticity of pork demand, trade associations attended by the Defendants, actions taken by some of the Defendants against their own self-interests, pricing practices, and the fact that some of these Defendants engaged in similar practices in the chicken industry . . . are undoubtedly strong and are of the type often used to support an inference of an agreement.’ 94

The court still dismissed the complaint without prejudice, however, because the plaintiffs failed to adequately plead parallel conduct sufficient to support an inference of conspiracy. 95 The court found that the plaintiffs’ industry-wide data only showed that pork production decreased overall in the years after 2009 but ‘does nothing to indicate how any of the individual defendants acted and that type of information [regarding which, how many, and when individual defendants affirmatively acted to reduce the supply of pork] is vital to pleading parallel conduct.’ 96 As a result, the court refused to ‘infer that the individual defendants all contributed to the decreased production.’ 97 In addition, the court found that the plaintiffs failed to allege parallel conduct that is ‘reasonably proximate in time and value’ as required by the Eighth Circuit’s holding in Park Irmat because the plaintiffs failed to allege when each defendant undertook production cuts. 98 As a result, the court found that it could not ‘analyze whether [d]efendants’ production cuts were temporally proximate.’ 99 The court also found the plaintiffs’ attempts to rely on public statements by the defendants’ executives unavailing. Other than one defendant, the court found that the public statements establish that ‘each Defendant simply noticed that the industry’s production as a whole was declining.’ 100 The court concluded that while it was clear that the pork industry as a whole experienced decreased production of pork:

The plaintiffs have not adequately pleaded that this decrease was the result of consciously parallel conduct undertaken by the specific defendants they accuse. Instead, the plaintiffs rely on industry-wide data and vague public statements and ask the court to infer that each defendant engaged in similar parallel conduct because they make up the majority of the industry. It may be true that some of these defendants cut production in the years following 2009. It may also be true that all of these defendants cut production. The fact that the complaints contain this ambiguity is exactly the problem and the court is unwilling to force defendants into significant and costly discovery without plausible allegations that they engaged in the conduct alleged. 101

Notes

1 Fed. Trade Comm’n v Sanford Health, 926 F.3d 959 (8th Cir. 2019).

2 The complaint refers to the Bismarck-Mandan area. For brevity and because geographic market definition was not at issue, we refer to Bismarck.

3 Sanford Health, 926 F.3d at 959, 962.

4 Id. (‘Under this approach, the plaintiffs must first present a prima facie case that the merger will result in an undue market concentration for a particular product or service in a particular geographic area. That showing creates a presumption that the merger will substantially lessen competition. The burden of production then shifts to the defendant to rebut the presumption, and, on a sufficient showing, back to the plaintiffs to present additional evidence of anticompetitive effects. The ultimate burden of persuasion remains at all times with the plaintiffs.’ (discussing United States v Baker Hughes Inc., 908 F.2d 981, 982–83 (D.C. Cir. 1990)).

5 Id. at 963.

6 United States v Philadelphia National Bank, 374 U.S. 321 (1963).

7 Sanford Health, 926 F.3d at 963.

8 Id.

9 Small but significant non-transitory increase in price. See id.

10 In North Dakota, there are three leading commercial insurers: Blue Cross Blue Shield North Dakota, Medica and Sanford Health Plan, with Blue Cross accounting for 61 per cent of the North Dakota health insurance market in 2016. In addition, ‘Blue Cross has a participation agreement with every general acute care hospital in the State and with approximately 99% of practicing physicians. Sanford and Medica accounted for 31% and 8% of the 2016 market, respectively.’ Id. at 962.

11 Id.

12 Id. at 964.

13 Id.

14 Id. 965–66.

15 Id.

16 946 F.3d 995 (8th Cir. 2019).

17 Id. at 995, 999.

18 Id. at 999.

19 Id.

20 Id. at 1001 (‘This line of reasoning [that flaws in analyses are factual issues to be determined by the jury], however, is contrary to precedent supporting the Daubert analyses required of the district court at this juncture. The nature of the instant dispute is not factual.’ (citations omitted)).

21 Id. at 1001–1002.

22 Id. at 1002.

23 Id.

24 Id. at 1003.

25 Wholesale Alliance, LLC v Express Scripts, Inc., 366 F. Supp. 3d 1069 (E.D. Mo. 2019).

26 Pharmacy First also brought state law tort claims and a claim for injunctive relief. See id. at 1069, 1074–75. The court declined to exercise supplemental jurisdiction over the state law tort claims and dismissed the claim for injunctive relief as a remedy and not an independent cause of action. Id. at 1082.

27 Id. at 1073.

28 Id.

29 Id.

30 Id.

31 Id.

32 Id. at 1074.

33 Id.

34 Id.

35 Id. It also alleged that access to Express Scripts’ network is essential to PSAOs and pharmacies in order to compete in the pharmacy market.

36 Id. at 1075.

37 Id.

38 Id.

39 Id.

40 Id.

41 Id. at 1076.

42 Id. at 1077.

43 Id.

44 Id. at 1078.

45 Id.

46 Id. at 1079.

47 Id.

48 Id. at 1080.

49 Id. (citing a circuit split between the Tenth, Fourth, Sixth and Ninth Circuits that have adopted the ‘economic interest’ test and the Second Circuit).

50 Id. at 1081.

51 Id.

52 Id.

53 420 F. Supp. 3d 903 (W.D. Mo. 2019).

54 Id. at 903, 910–11. The Adversary Commission Rule is the plaintiffs’ characterization of section 2-G-1 of NAR’s MLS Listing Handbook. Id. at 911.

55 Id.

56 NAR also sought dismissal for lack of personal jurisdiction. The court held that it had personal jurisdiction over NAR based on section 12 of the Clayton Act. Id.

57 The Corporate Defendants’ corporate structures varied and included subsidiaries, franchises and affiliates. For ease, we refer to all of them as subsidiaries here.

58 Nat’l Ass’n of Realtors, 420 F. Supp. 3d at 913.

59 Id. at 914.

60 Id. at 915. The plaintiffs did not allege a per se violation.

61 Id.

62 Id.

63 Id. at 916.

64 Physician Specialty Pharm. v Prime Therapeutics, No. 18-cv-1044 (MJD/TNL), 2019 U.S. Dist. Lexis 53115 (D. Minn. Jan. 23, 2019).

65 Id. at *2.

66 Allegations relate to Walgreens and its mail-order subsidiary, AllianceRx, but for brevity, we reference Walgreens here.

67 Physician Specialty, 2019 U.S. Dist. Lexis 53115 at *4.

68 Id. at *10.

69 Id. at *11.

70 Id. at *13.

71 Id. at *13–14.

72 Id. at *14, 16.

73 Id. at *16.

74 PSP relied on a study for the argument that Blue Cross covered over 90 per cent of large health plans in Alabama. The court relied on that same study to point out that there were another 4 million Alabama residents covered by other types of health insurance.

75 Physician Specialty, 2019 U.S. Dist. Lexis 53115 at *20.

76 Id. at *21–22.

77 Id. at *22.

78 Id.

79 Id. at *24–25.

80 506 U.S. 447 (1993).

81 Physician Specialty, 2019 U.S. Dist. Lexis 53115 at *26–27.

82 Id. at *27–28.

83 Physician Specialty Pharmacy, LLC v Prime Therapeutics, LLC, No. 18-1044 (MJD/TNL), 2019 U.S. Dist. Lexis 52431, at *3–4 (D. Minn. Mar. 28, 2019).

84 No. 18-1776 (JRT/LIB), 2019 U.S. Dist. Lexis 133165 (D. Minn. Aug. 8, 2019).

85 Direct purchaser plaintiffs, consumer indirect purchaser plaintiffs and commercial and institutional indirect purchaser plaintiffs.

86 In re Pork Antitrust Litig., 2019 U.S. Dist. Lexis 133165 at *3.

87 Id. at *5.

88 Id.

89 Id. at *6.

90 Id. at *7.

91 Id.

92 Id. at *10–13.

93 Id. at *20.

94 Id. at *21.

95 Id. at *20.

96 Id. at *23.

97 Id. at *24.

98 Id. (citing Park Irmat Drug Corp. v Express Scripts Holding Co., 911 F.3d 505, 516 (8th Cir. 2018)).

99 Id.

100 Id. at *26.

101 Id. at *27–28.

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