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Marion Healthcare, LLC v. Becton Dickinson & Co.

United States Court of Appeals for the Seventh Circuit

September 27, 2019, Argued; March 5, 2020, Decided

No. 18-3735


 [*836]  ] Wood, Chief Judge. Since the Supreme Court's decision in Illinois Brick v. Illinois, 431 U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), only those buyers who purchased products directly from the antitrust violator have a claim against that party for treble damages. "Indirect purchasers" who paid too much for a product because cartel or monopoly overcharges were passed on to them by middlemen must take their lumps and hope that the market will eventually sort everything out. See, e.g., Sharif Pharm., Inc. v. Prime Therapeutics, LLC, Nos. 18-2725 and 18-3003, 950 F.3d 911, 2020 U.S. App. LEXIS 5549, 2020 WL 881267 at *2 (7th Cir. Feb. 24, 2020). Matters are different, however, when a monopolist enters into a conspiracy with its distributors. In such cases, "the first buyer from a conspirator is the right party to sue." Paper Sys. Inc. v. Nippon Paper Indus. Co., 281 F.3d 629, 631 (7th Cir. 2002).

The plaintiffs in this case ("the Providers") are healthcare companies that purchased medical devices manufactured by Becton Dickinson & Company. Healthcare providers often do not purchase medical devices directly from the manufacturer; instead, they join a group purchasing organization, known in the trade as a GPO. The GPO negotiates prices with the manufacturer on behalf of its members. It then presents the terms to the provider, which has the opportunity to accept [**4]  them or reject them. If the provider agrees to the terms, it chooses a distributor to deliver the product. The distributor then enters into contracts with the healthcare provider and the manufacturer. These contracts obligate the distributor to procure the products from the manufacturer and to sell them to the provider. The distribution contracts with the providers incorporate the price and other terms of the agreements that the GPO negotiated, plus a markup for the chosen distributor.

Our Providers purchased medical devices in the manner just described. A GPO negotiated with Becton on the Providers' behalf, and a distributor delivered the devices. Had Bec-ton acted alone, selling its products to an independent distributor, which then sold them to a healthcare provider, no one doubts that the Illinois Brick rule would bar the provider from suing Becton for any alleged monopoly overcharges. But these transactions were more complex. The Providers allege that Becton, the GPOs, and the distributors (to whom  [*837]  we refer collectively as Becton unless the context requires otherwise) joined forces in a conspiracy and engaged in a variety of anticompetitive measures, including exclusive-dealing [**5]  and penalty provisions. Becton moved to dismiss, arguing that the Illinois Brick rule barred the case despite the Providers' allegations of conspiracy.

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952 F.3d 832 *; 2020 U.S. App. LEXIS 6938 **; 2020-1 Trade Cas. (CCH) P81,113

Marion Healthcare, LLC, et al., Plaintiffs-Appellants, v. Becton Dickinson & Company, et al., Defendants-Appellees.

Prior History:  [**1] Appeal from the United States District Court for the Southern District of Illinois. No. 3:18-cv-01059-NJR-RJD — Nancy J. Rosenstengel, Chief Judge.

Marion Diagnostic Ctr., LLC v. Becton, Dickinson, & Co., 2018 U.S. Dist. LEXIS 203407 (S.D. Ill., Nov. 30, 2018)


distributors, conspiracy, Providers, manufacturer, purchaser, overcharge, prices, anticompetitive, consumers, antitrust, products, negotiated, cases, coordinated, damages, contracts, alleged conspiracy, anti trust law, conspirator, entity, terms, anticompetitive conduct, terms of the contract, healthcare provider, district court, vertical, seller, buyer, Toys

Antitrust & Trade Law, Private Actions, Purchasers, Direct Purchasers, Regulated Practices, Trade Practices & Unfair Competition, Monopolies & Monopolization, Conspiracy to Monopolize, Elements, Clayton Act, Remedies, Damages, Remedies, Indirect Purchasers, Scope, Conspiracy to Monopolize, Price Fixing & Restraints of Trade, Vertical Restraints, Civil Procedure, Pleadings, Complaints, Requirements for Complaint, Sanctions, Baseless Filings, Vexatious Litigants