CHICAGO – U.S. Seventh Circuit appellate judges found Chief District Judge Nancy Rosenstengel correctly dismissed a class action complaint over the price of syringes.
On March 18, they affirmed her ruling that Marion Diagnostic Center failed to state an antitrust claim against syringe maker Becton Dickinson.
They also affirmed her rulings that the clinic failed to state a claim against distributor McKesson and lacked standing to sue distributor Cardinal.
Rosenstengel dismissed the complaint last March.
She had dismissed it previously, but on appeal the Seventh Circuit found she should have allowed the clinic to amend the complaint.
Amendment didn’t save the complaint.
Chief Seventh Circuit Judge Diane Sykes found the clinic needed to show that a conspiracy involving Becton Dickinson and two distributors influenced prices for providers regardless of which distributor they purchased from.
“In our view, this is simply not plausible,” Sykes wrote.
Steven Molo of the Molo Lamken firm in Chicago and four others in his firm filed the original complaint in 2018.
They sued Becton Dickinson, McKesson, Cardinal, two other distributors, and two “group purchasing organizations” that negotiated contracts between manufacturers and providers.
Rosenstengel dismissed it in six months for failure to state a claim, but the Seventh Circuit granted a second chance in 2020.
Molo amended the complaint to remove claims against the group purchasing organizations and two distributors.
In place of a broad conspiracy he claimed Becton Dickinson engaged in two conspiracies, one with McKesson and one with Cardinal.
Defendants moved to dismiss, and Rosenstengel held a hearing last year.
Molo told her circumstantial evidence supported a notion that McKesson and Cardinal made a conscious decision to participate in restraint of trade.
He claimed they suppressed demand for products of Becton’s competitors.
He claimed they cut off credit for providers, increased delivery costs, lied about products of Becton’s competitors, and revealed buying information only to Becton.
“They get higher distribution fees because of the higher prices that Becton is able to charge with their assistance,” he said.
He said they frequently communicated with Becton about its competitors.
Rosenstengel dismissed Cardinal for lack of standing, finding the clinic didn’t buy syringes from Cardinal.
She found no connection between Cardinal and any injury except the general effect Cardinal’s activity had on the market at large.
“This connection is vague and tenuous,” Rosenstengel wrote.
She dismissed McKesson, finding it received bonuses and incentives for sales staff, higher fees, and contracts with long terms.
“These look like standard features of any distributor relationship,” she wrote.
The clinic’s second appeal turned out worse than the first, as Seventh Circuit judges saw no point in amending the complaint again.
Sykes found the clinic didn’t allege that McKesson or Cardinal had power in the distribution market.
“Without market power, it is hard to understand how Cardinal or McKesson would be able to raise prices on Becton Dickinson’s products without losing business to other distributors,” Sykes wrote.
She found constant communication between a manufacturer and distributors doesn’t show that distributors don’t make independent pricing decisions.
She found the complaint was silent on whether sales representatives knew of any conspiracy much less intended to participate in one.
She found the clinic didn’t explain why it couldn’t choose distributors who didn’t conspire with Becton Dickinson.
Richard Cassetta and Stefani Wittenauer of Bryan Cave in St. Louis and three lawyers at Paul, Weiss, and Rifkind in New York City represented Becton Dickinson.
Richard Stone of Jenner and Block in Los Angeles and three others in the firm represented McKesson.
Michelle Fischer of Jones Day in Cleveland and three others in the firm represented Cardinal.