Opinion
Case No. MDL 1030. This document relates to civil actions: 97-698, 97-861, 97-928, 98-93, 98-511, 98-515, 98-536, 98-638.
February 8, 2001
ORDER
This case is before the Court on Defendant Bausch and Lomb's Motion for Summary Judgment with Respect to the National Class and the State of Florida (Doc. No. 191), Bausch and Lomb's Motion for Summary Judgment Against Plaintiff States on Federal Antitrust Claims (Doc. No. 800), Defendant Johnson and Johnson's Motion for Summary Judgment on Antitrust Claims with Respect to the National Class and the State of Florida (Doc. No. 159), Johnson and Johnson's Motion for Summary Judgment on the States' Manufacturer Conspiracy Claim (Doc. No. 820), and Defendant Johnson and Johnson's Motion for Summary Judgment Against the Plaintiff States' Prescription Release Conspiracy Claim (Doc. No. 823). The Plaintiffs have filed oppositions to the motions. Additionally, several replies to the motions have been filed. Accordingly, these mailers are ripe for consideration. This Order does not, however, deal with Bausch and Lomb and Johnson and Johnson's claim that they are entitled to summary judgment on various states' "Little FTC Act" claims.
I. Background
Plaintiffs' Amended Complaint (Complaint) alleges that Defendants Johnson Johnson Vision Products, Inc. (J J), Bausch Lomb, Inc. (BL) and CIBA Vision Corporation (CIBA), the largest manufacturers of contact lenses in the United States, have unlawfully conspired among themselves and with two trade organizations for eye care practitioners (ECPs), to restrict the supply of replacement contact lenses to alternative channels of distribution. Plaintiffs are contact lens wearers from across the country who have purchased replacement lenses from ECPs allegedly at higher prices, allegedly because of Defendants' practices. Plaintiffs' claims are based on the theory that, but for the alleged conspiracy restricting their wholesale sales to mail order houses and pharmacies, so called "alternative suppliers," would have offered their consumers lower prices for contact lenses. Put another way, Plaintiffs allege that consumers would not have paid higher prices to the ECPs if they had a cheaper alternative source through mail order houses and pharmacies.
Vistakon, a Johnson Johnson Company, is referred to numerous times in this Order. Acuvue, a Johnson Johnson disposable lens is also frequently referred to.
CIBA has reached a tentative settlement with the Plaintiffs in this case.
The two trade organizations are the American Optometric Association (AOA) and the Contact Lens and Anterior Segment Society, Inc. (CLASS). See Complaint at 66 I, 37(d). CLASS was a group of particularly influential ECPs. CLASS is not a Defendant in this case because CLASS filed a suggestion of bankruptcy shortly after this action was filed.
The lenses that are the subject of this lawsuit are disposable contact lenses which are designed to be worn for a short period of time, ordinarily one to two weeks, and then thrown away and replaced with an identical fresh pair of lenses. Disposable lenses are usually sold in multipaks of six pairs of lenses.
Pharmacies and mail order businesses.
II. Standard
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A defendant may move for summary judgment as to the entire case "or any part thereof" Fed.R.Civ.P. 56(b). The moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact to be decided at trial. See Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Clark v. Coats Clark, Inc., 929 F.2d 604 (11th Cir. 1991).
A moving party discharges its burden on a motion for summary judgment by "showing" or "pointing out" to the Court that there is an absence of evidence supporting the nonmoving party's case. Celotex, 477 U.S. at 325. Rule 56 permits the moving party to discharge its burden with or without supporting affidavits. See id. When a moving party has discharged this burden, the nonmoving party must then "go beyond the pleadings and by [its] own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Id. at 324 (quotations omitted).
In determining whether the moving party has met its burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a mailer of law, the Court must draw inferences from the evidence in the light most favorable to the nonmoving party. See Key West Harbour Development Corp. v. City of Key West, 987 F.2d 723, 726 (11th Cir. 1993). The nonmoving party need not be given the benefit of every inference, but only of every "reasonable" inference. See Brown v. City of Clewston, 848 F.2d 1534, 1540 n. 12 (11th Cir. 1988). The Eleventh Circuit has explained the reasonableness standard:
In deciding whether an inference is reasonable, the Court must cull the universe of possible inferences from the facts established by weighing each against the abstract standard of reasonableness. The opposing party's inferences need not be more probable than those inferences in favor of the movant to create a factual dispute, so long as they reasonably may be drawn from the facts. When more than one inference reasonably can be drawn, it is for the trier of fact to determine the proper one.WSB-TV v. Lee, 842 F.2d 1266, 1270 (11th Cir. 1988) (citations and quotations omitted).
Thus, if a reasonable fact finder evaluating the evidence could draw more than one inference from the facts, and if that inference introduces a genuine issue of material fact, then the court should not grant the summary judgment motion. See Augusta Iron Steel Works v. Employers Ins. of Wausau, 835 F.2d 855, 856 (11th Cir. 1988). It must be emphasized that "the mere existence of some alleged factual dispute . . . will not defeat an otherwise properly supported motion for summary judgement; the requirement is that there be no genuine issue of material fact" Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A dispute about a material fact is "genuine" if the "evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. The inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a mailer of law." Id. at 251-52.
III. Analysis
As an initial matter, although Defendant manufacturers have filed numerous summary judgment motions regarding Plaintiffs' different theories of antitrust liability, these theories are intertwined. As the Supreme Court has stated, an alleged conspiracy should not be judged "by dismembering it and viewing its separate parts, but only by looking at it as a whole." Continental Ore Co. v. Union Carbide Carbon Co., 370 U.S. 690, 699 (1962). This Court, therefore, will not deal with these individual motions as they relate to Defendant manufacturers in isolation but rather en masse. Additionally, this Court notes that Plaintiffs have submitted voluminous evidence to this Court. This Order will only comment on a very small portion of that evidence because this Court only need find sufficient evidence to create a genuine issue of material fact in order to deny Defendants' assertions that they are entitled to summary judgement. In other words, if Plaintiffs in their oppositions submit ten different evidentiary items to establish one element of one of their claims, if one of those items is legally sufficient to create a genuine issue of material fact, this Court need only comment on that particular item rather than all ten.
A threshold requirement of every antitrust conspiracy claim is "an agreement to restrain trade." To prove that such an agreement exists, a plaintiff must show "a unity of purpose or a common design and understanding, or a meeting of minds in an unlawful arrangement." Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1573 (11th Cir. 1991) (quoting American Tobacco CO. v. United States, 328 U.S. 781, 810 (1946)). The protection of price competition from conspiratorial restraint is an object of special concern in antitrust law. U.S. v. General Motors Corp., 384 U.S. 127, 148 (1966).
Per se Conspiracy
Plaintiffs first contend that Defendant manufacturers' actions constitute a per se violation of Section 1 of the Sherman Antitrust Act as a "classic group boycott." They argue that a reasonable fact finder could conclude from the evidence that the ECP community threatened to boycott any manufacturer who did not implement an ECP-only distribution policy and that Defendant manufacturers reached a tacit, if not express, agreement with the ECP community and each other to restrict sales to alternate channels.
A group boycott is a per se violation of antitrust laws and the anticompetitive effects of such actions are a given. Seagood Trading Corp. v. Jerrico, Inc., 924 F.2d 1555, 1567 n. 33 (11th Cir. 1991). Thus, the only inquiry in this type of case is whether a boycott existed. Further, group boycotts of even a single trader are among those "classes of restraints which from their nature or character were unduly restrictive." U.S. v. General Motors Corp., 384 U.S. 127, 145 (there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use, and that group boycotts are of this character). Id. at 146.
Additionally, elimination, by joint collaborative action, of discounters from access to the market is a per se violation of the Sherman Act. U.S. v. General Motors Corp., 384 U.S. 127, 145. ("[O]nce the agreements were secured, General Motors both solicited and employed the assistance of its alleged co-conspirators in helping to police them. What resulted was a fabric interwoven by many strands of joint action to eliminate the discounters from participation in the market, to inhibit the free choice of franchised dealers to select their own methods of trade and to provide multilateral surveillance and enforcement. This process for achieving and enforcing the desired objective can by no stretch of the imagination be described as `unilateral' or merely `parallel.'"). Plaintiffs have alleged that a conspiracy similar to that in General Motors existed in the instant case.
Boycott evidence
Plaintiffs have proffered the following evidence, inter alia, that they allege creates a genuine issue of material fact regarding whether the ECP community threatened to boycott the Defendant manufacturers' replacement lenses if they sold to alternative channels of distribution:
A letter dated October 9, 1991 (original version A0600113-15) that Defendant Dr. Ronald Snyder wrote to Vistakon's President, Phillip Keefer. Plaintiffs allege that this letter threatened an economic boycott of Vistakon by CLASS. The first line of the letter discusses "market trends which will adversely effect your products" and later, when discussing Acuvue patients who wanted to receive their prescriptions and purchase lenses elsewhere, the letter states that the physicians' "motivation to prescribe or renew Acuvue programs has fizzled . . . . unless we can get some answers in the very near future we might be first in, first out. With no other alternatives, I suspect my colleagues will follow suit." Regarding Vistakon's ECP-only distribution policy the letter stated that, "the salvation of the disposable lens market will require an eye care practitioner/manufacturer partnership." Id.
A Wisconsin Optometric Association's "Dear WOA Colleagues" letter which advises ECPs to discuss diversion with the Defendant manufacturers' sales reps "and put pressure on them. . . . Ask what they are doing about this." (A002258-63).
Evidence of the activities of the state optometric associations can be probative to whether the manufacturer Defendants capitulated to the desires of the ECPs' umbrella organization, the AOA.
A March 28, 1996 article in an ECP trade publication, EyeQuest, discussing interviews with Dr. Norm Ginis of Contact Lens Supply and Dr. Lee Rigel, past president of the AOA's Contact Lens Section (CLS), regarding pharmacy sales. Plaintiffs allege that Rigel warned there would be an ECP boycott if the Defendant manufacturers did not agree to the ECP community's demands to reduce diversion to the alternate channels. Dr. Rigel's statement in that article told manufacturers if they sold directly to the public "they will be cut off from the professional community so quickly that they will lose their source of prescribing practitioners . . . it would be devastating to their whole market position." (EyeQuest, "0 vs. 0: Should contact lenses be dispensed in drug stores? CV 18359).
Phillip Keefer, Vistakon's Executive Vice President and Ellen Preston, a top Vistakon sales executive, met with CLASS representatives in Phoenix, Arizona on November 8, 1991. According to a memo written by Preston, during the meeting there was "a threat to refit current Acuvue patients" by "a few ECPs" and notes that the following, inter alia, was discussed at that meeting: (1) ways to hide product names and lens specifications from the consumer, (2) production of private label lenses that could only be purchased from the prescribing ECPs, (3) advertising campaigns urging patients to see their ECPs including letters from Vistakon to patients urging them to see their ECPs, (4) having patients enter year long contracts for lenses. The memo closes recommending a team of managers discuss the issue and "possible next steps." (Memo from Preston to Caldarera, VO1322-26).
The notes of Vistakon's Keefer that memorialize the November 1991 CLASS meeting and allegedly discuss a boycott threat. (Keefer Notes, V04930). Although Keefer later testified that the "boycott" reference in his notes meant something unlike the conventional definition, (Keefer Deposition at 226-31), Plaintiffs allege it is for the jury to resolve this difference because the jury is entitled to believe Keefer meant boycott in the traditional sense when he wrote the word.
Notes of an October 1988 California Optometric Association speech where B L's Johnson, when discussing disposable lenses and alternative channels stated . . . "frustrated practitioners are looking to manufacturers to stop selling their products to these new channels." (Johnson Speech, October 8, 1988, Lake Tahoe, California, B L 00032306-316, page 4).
See note 7, infra.
CIBA Vision produced a list of pros and cons regarding the opening of the retail market to alternative channels. The con side of the list includes "may be boycoiled by professional trade." (CV09038).
A Vistakon memo discussing the agenda for the AOA/Vistakon meeting that took place January 15, 1992 stating, inter alia, "reduc[ing] the possible trend away from prescribing Acuvue/Surevue as a result of patients' [sic] buying lenses from outlets other then [sic] their own practitioner." (Wechsler to Walsh, et al., Memo of December 9, 1991, J 7196).
This Court finds that Plaintiffs have proffered sufficient evidence to create a genuine issue of material fact regarding whether a boycott, or threats of a boycott, existed. Regardless, evidence of an explicit boycott threat is not necessary to allege a per se conspiracy. Rather, for a conspiracy to exist, evidence must be presented that the distributor communicated its acquiescence or agreement, and that this was sought by the manufacturer. Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764 (1984). If the Plaintiffs' evidence is believed by the factfinder it would support such a conspiracy conclusion.
Agreement Evidence
Plaintiffs argue that besides the evidence of a boycott there is also ample evidence of an alleged illegal agreement between the Defendant manufacturers and the ECP Defendant manufacturers deny any such agreements were reached. However, as stated by the Eleventh Circuit, "(Courts] must look beyond the defendants' bald denial of concerted action and analyze the substance of [plaintiffs] evidence in order to determine whether summary judgement (is] appropriate. DeLong Equipment Co. v. Washington Mills Abrasive Co., 887 F.2d 1499, 1515 (11th Cir. 1989). To support the alleged illegal agreement, Plaintiffs point to similarities in the Defendant manufacturers' conduct and documented meetings and communications that demonstrate not only complaints and requests for action by the ECP community but also that there was a meeting of the minds between the two groups regarding compliance with those alleged illegal requests. As in General Motors. Plaintiffs allege that the instant case is a "classic conspiracy in restraint of trade: joint, collaborative action by dealers" . . . and the manufacturers "to eliminate a class of competitors by terminating business dealings between them . . ." General Motors, 384 U.S. at 140.
Defendant has attempted to distinguish General Motors because that case involved specific complaints about specific distributors, discussions with the distributors, targeting some of those distributors, and reports regarding the targeting as well as agreements and collaboration in regards to those distributors. Regardless, even under the standard that Defendants urge this Court to use, which was articulated in Monsanto Co. v. Spray-Rite Service Corp., and will be discussed in this Order, supra, Plaintiffs have proffered enough evidence to create a genuine issue of material fact as to whether Defendant manufacturers' actions evidence a conspiratorial agreement with the following:
An outline of a January 17, 1992 meeting where Phillip Keefer "Listened to Eye professionals" and "revised customer policy." (Keefer presentation slides, V03729).
A May 30, 1989 letter from Vistakon's Sheldon Wechsler to AOA/CLS Secretary Stanley Yamane summarizing a recent Vistakon advisory panel meeting (which was attended by members of the ECP community) and which allegedly discussed jointly determining "What organizations were diverting Acuvue and cutting off the diverter' s supply. "(Yamane Deposition, March 30, 1995, exhibit 12, p. 2).
A letter from Bernie Walsh, Vistakon's President, to a physician allegedly regarding J J's fitter-on-the-premises policy. The letter states, "our policy is new and it will take a little time to eliminate some of the unauthorized sources of supply. You will be pleased to know that several of the larger mail-order houses are already out of product." (emphasis added) (Walsh to Dr. Hillier, Letter of May 4, 1992, V004 16).
A deposition excerpt wherein Vistakon's Consumer Products Director was asked why Vistakon changed its policy, stated "We couldn't sell our products and doctors were saying to sales reps, `I am losing patients; therefore, I don't want to put any more new patients in Acuvue because they will walk out of my door.'" (Koberna Deposition, March 15, 1995, page 45).
A Vistakon Worldwide Franchise Report for 1991 (J 3020-21), which when discussing diversion, stated, "[diversion] is causing a major negative reaction from our customers, the doctors, many of whom are considering not fitting disposables. We are tightening our control of the product and will become more aggressive enforcing our policy." Plaintiffs have produced further evidence of Vistakon's alleged increased enforcement efforts in the Spring of 1992. Plaintiffs have also produced evidence of alleged increased enforcement efforts by B L during the same time period (See Plaintiff States' Consolidated Statement of Facts (States' Facts), pages 85-87).
A letter from Phillip Keefer, an Executive Vice President at Vistakon, to AOA president David Sullins, dated October 9, 1989, discussing their October 5, 1989 meeting in Ponte Vedra Beach, Florida, and which purports to "summarize what we discussed and some of the conclusions" and later discusses "working together to eliminate diversion of Acuvue lenses . . . we will do several things?' The list includes "change our labelling (sic)" to state Acuvue is "for prescription use only by a licensed optometrist . . ., we also want to include the word `unlawful' in the statement" and "giving the names of optometrists who are confirmed diverters to the AOA so that you can discuss this behavior with state boards for further action." (VO1182). A subsequent letter to Dr. Hopping (Keefer to Hopping letter, October 23, 1989, A003202) provides "personal comments on each of your stated conclusions" and suggests the two "talk to clarify and resolve any existing variations." An attachment to the letter discussed a change in labeling, as well as Vistakon giving the names of those "confirmed to be diverters" to the AOA so that the AOA can forward those names to the applicable state licensing agencies. (A003203-04). Later, Hopping wrote Keefer asking whether "we have any differences in our interpretation that needs (sic) to be clarified." (November 10, 1989 letter from Hopping to Keefer, A003194). Although the parties dispute when the decision to change the labeling was made, the labeling was in fact subsequently changed to read, "This label is not a prescription" and "unlawful to dispense without a prescription." Lastly, a subsequent letter from Keefer to Sullins (Dated December 21, 1989, V01758) allegedly confirms that five of the seven points that the AOA and Vistakon discussed and then outlined after the October 5, 1989 meeting had been accomplished.
A memo written by Vistakon's D. R. Yadon, given to Vistakon sales personnel which is entitled "Vistakon Gets Tough on Diverters," discussing a "joint effort between the manufacturers and professional organizations to address this [diversion] problem." (February 21, 1990, 1400).
A letter from Hal Johnson (B L's then-president) to Richard Hopping of the AOA that, when recalling a Rochester meeting between the two groups, told Dr. Hopping. "We need to lean on each other and not be bashful . . . . [regarding] sharing our thoughts relating to mail order contact lens and drug store dispensing . . ." (Letter from Johnson to Hopping, October 16, 1989, 02088).
A letter from Dr. Rigel of the AOA to Dr. Hopping of the AOA, which discussed the Rochester meeting with B L regarding "whether we could jointly influence [alternative sales]." (Letter from Rigel to Hopping, November 20, 1989, Florida Consolidated Statement of Facts (Florida Facts) at Tab 43, Bates number indecipherable).
Agreement standard
As mentioned, Plaintiffs allege that the aforementioned evidence is enough to create a genuine issue of material fact regarding whether there was an illegal agreement between the manufacturer Defendants and the ECP community. Plaintiffs argue that, even without the proffered documentation, the manufacturers' actions after the meetings at issue are difficult, if not impossible, to explain as unrelated to those meetings and therefore, at the very least, there is a genuine issue of material fact as to whether an agreement to restrain trade was reached.
"[I]t has long been settled that explicit agreement is not a necessary part of a Sherman Act conspiracy — certainly not where, as here, joint and collaborative action was pervasive in the initiation, execution, and fulfillment of the plan." General Motors Corp., 384 U.S. at 142-43. In Isaksen v. Vermont Castings, Inc., 825 F.2d 1158 (7th Cir. 1987), that Court held that when a conspirator warns a non-complying dealer to restrain trade and the dealer "merely grunts but complies" there is agreement. Id. at 1164.
This Court agrees that Plaintiffs have proffered ample evidence to create a genuine issue of material fact regarding whether an illegal agreement was reached between the ECP community and the manufacturer Defendants.
Rule of Reason
Defendants argue not only that Plaintiffs have failed to create a genuine issue of material fact regarding whether a per se conspiracy exists, but also that this Court should analyze this case as a rule of reason conspiracy under the inference shifting rubric articulated inMonsanto v. Spray-Rite. Plaintiffs argue that the Monsanto inferences do not apply because the evidence of an illegal conspiracy is clear; the analysis applies only when the evidence of agreement is ambiguous and that Monsanto applies in cases when the behavior at issue is as consistent with permissible competition as with illegal conspiracy.
Assuming, arguendo, that the aforementioned evidence is not enough to allege a per se conspiracy based on a boycott and/or an illegal agreement between the Defendants, alternatively, if the fact finder believes the proffered evidence to be true the fact finder could conclude that Plaintiffs have produced enough evidence of a conspiracy under the rule of reason/Monsanto standard. Therefore summary judgment is not appropriate as to this issue.
Economic Feasibility/Rationality
To prove a rule of reason antitrust claim, a Plaintiff must first demonstrate that the alleged conspiracy makes economic sense. "It follows from these settled principles that if the factual context renders [the] claim implausible — if the claim is one that simply makes no economic sense — [Plaintiffs] must come forward with more persuasive evidence to support their claim than would otherwise be necessary." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). "Matsushita dictates that if the alleged conspiracy is economically infeasible or irrational then, as a matter of law, summary judgment must be entered against the plaintiff" Helicopter Support Sys., Inc. v. Hughes Helicopter. Inc., 818 F.2d 1530, 1534 (11th Cir. 1987). ("[T]he plaintiff must establish that each defendant would have acted unreasonably in a business sense if it had engaged in the challenged conduct unless that defendant had received assurances from the other defendants that they would take the same action.") City of Tuscaloosa v. Harcos Chemicals, Inc., 158 F.3d at 571 (11th Cir. 1998).
Of course if a per se conspiracy exists, economic motivations are irrelevant.
Where companies "concert their actions in order to deprive others of access to merchandise which the latter wish to sell to the public, we need not inquire into the economic motivation underlying their conduct. Exclusion of traders from the market by means of combination or conspiracy is so inconsistent with the free-market principles embodied in the Sherman Act that it is not to be saved by reference to the need for preserving the collaborators' profit margins or their system for distributing automobiles, any more than by reference to the allegedly tortious conduct against which a combination or conspiracy may be directed . . . [thus] we need not inquire into the economic motivation underlying (the manufacturer's] conduct.General Motors, 384 U.S. at 146.
As further noted by the Supreme Court,
because the action taken constitutes a combination or conspiracy, it is not necessary to consider what might be the legitimate interest of a [conspirator] in securing compliance by others . . . or the lawfulness of action a [conspirator] might individually take to vindicate this interest . . . it is of no consequence, for purposes of determining whether there has been a combination or conspiracy under Section 1 of the Sherman Act, that each party acted in its own lawful interest.General Motors, 384 U.S. at 140-41, 142.
Assuming a per se conspiracy does not exist, after demonstrating the alleged conspiracy is economically rational, the Plaintiff then must then proffer evidence showing that the Defendant manufacturers engaged in consciously parallel action.
Conscious parallelism is a "process, not in itself unlawful, by which firms in a concentrated market might in effect share monopoly power, setting their prices at a profit-maximizing, supracompetitive level by recognizing their shared economic interests and their interdependence with respect to price and output decisions." Brooke Group Ltd. v. Brown Williamson Tobacco Corp., 509 U.S. 209, 227 (1993). As articulated by the Eleventh Circuit:
Conscious parallelism is the practice of interdependent pricing in an oligopolistic market by competitor firms that realize that attempts to cut prices usually reduce revenue without increasing any firm's market share, but that simple price leadership in such a market can readily increase all competitors' revenues.Tuscaloosa, 158 F.3d at 570.
An oligopolistic market may be defined as a market in which "the dominant participants engag[e] in interdependent or parallel behavior and [have] the capacity effectively to determine price and total output of goods or services." Tuscaloosa.
A conspiracy can be inferred if, in addition to conscious parallelism, the plaintiff demonstrates that each defendant engaging in the parallel action acted contrary to its economic self-interest (what that defendant's legitimate economic self-interest would be had it acted alone; a price-fixing conspiracy, if successfully implemented, is in the collective self-interest of the conspirators) or proffers other "plus factors" that tend to establish that the Defendants were not solely engaging in oligopolistic pricing but rather in a collusive agreement to restrain trade. Tuscaloosa, 158 F.3d at 565.
Further, to infer a conspiracy, something more than evidence of complaints is needed. However, as the Supreme Court has stated, evidence of complaints can be relevant:
We do not suggest that evidence of complaints has no probative value at all, but only that the burden remains on the antitrust plaintiff to introduce additional evidence sufficient to support a finding of an unlawful contract, combination, or conspiracy. . . There must be evidence that tends to exclude the possibility that the manufacturer and non terminated distributors were acting independently. As Judge Aldisert has written, the antitrust plaintiff should present direct or circumstantial evidence that reasonably tends to prove that the manufacturer and others "had a conscious commitment to a common scheme designed to achieve an unlawful objective."Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 753-764 and note 8.
Thus, there must be evidence that tends to exclude the possibility of independent action by the Defendant manufacturers and the ECP community.Id. at 753.
Plus factors
As noted previously, under Monsanto after demonstrating conscious parallelism, a Plaintiff must then show "plus factors" that tend to exclude the possibility that the Defendant manufacturers merely were engaged in lawful conscious parallelism. The Eleventh Circuit has held that acting against one's economic self interest is a plus factor. ("One prominent "plus factor," to which antitrust plaintiffs often take recourse, is a showing that the defendants' behavior would not be reasonable or explicable [i.e. not in their legitimate economic self interest] if they were not conspiring to fix prices or otherwise restrain trade — that is, that the defendants would not have acted as they did had they not been conspiring in restraint of trade.") Tuscaloosa, 158 F.3d at 572.
Numerous plus factors articulated by other circuits include "motive to conspire," and "high level of inter-firm communications." Appex Oil Co. v. DiMauro, 822 F.2d 246, 253-54 (2d Cir.), cert. denied, 484 U.S. 977 (1987).
The Plaintiffs allege that the following, in addition to the previously mentioned evidence of a boycott, an illicit agreement, constitutes rule of reason/Monsanto plus factor evidence:
A Memo written by Craig Scott, Vistakon's Vice President for Marketing to Phillip Keefer discussing "our action plan" regarding patient retention. The Plaintiffs allege this plan was promulgated as a result of the November 1, 1989 Vistakon Board Meeting. The stated objectives were to assist ECPs in retaining patients and to maintain ECPs' "positive attitude toward fitting new patients with Vistakon products." The two strategies listed to further those ends were to reduce the supply and the demand for diverted products. The memo went on to discuss, inter alia, disguising the prescription from the patient and also discussed obtaining AOA feedback on the aforementioned proposals. (J7852-54).
A Vistakon contracted report, the so-called McKinsey report which suggested, inter alia, J J opening up distribution channels as wide as possible with the result (for consumers) being increased convenience, decreased cost, and increased compliance with wear schedules, which decreases health risks. (McKinsey Report, 1985, "Developing an Entry Strategy for Molded Contact Lenses," V 05508-56). The Plaintiffs allege that the report concluded that because the disposable lens is so frequently replaced, ECP-only distribution was both economically and pragmatically undesirable, and as the Plaintiffs contend, open distribution was clearly in the manufacturers' self interest. Plaintiffs further allege that a subsequent McKinsey Report "Achieving Acuvue Profitability," (V 05717-66), did not advance this theory with the same enthusiasm because the ECP community criticized the initial report.
Evidence Vistakon talked to and heard from groups of ECPs about disguising patient prescriptions. (Letter from Scott to Harkleroad, April 2, 1992, V04342).
A Vistakon handout for its sales force, that was evidently intended for distribution to the representatives' ECPs, which advised, inter alia, "If the patient hasn't been examined within six months explain that . . . [the prescription] cannot be released." (emphasis in original) (Preston to Kelly, et al., Memo "Releasing Contact Lens Prescriptions," January 15, 1993, J 12886-90).
A December 4, 1991 Jetter from Dr. Wechsler to the Vistakon Management Board, which, when discussing a complaint regarding Lens Express stated, "in view of the similar complaints by the members of C.L.A.S.S. . . . [we will develop] a solution to the problem (of mail order) through joint action." (V01611).
Documentation regarding a September 28, 1989 meeting where certain AOA officials met with B L executives in Rochester, New York. AOA's Dr. Sullins planned to discuss ideas of how B L could "support the profession" and "work together" on the diversion problem. (Memo from McDermott to Reiser, August 25, 1989; Reiser Deposition July 19, 1995, Exhibit No. 16, 00030171). Draft minutes indicated alternative suppher sales were discussed. (Hopping's typewritten notes, H000002-4; VOl 182-84). The notes reflect a discussion regarding whether a prescription should be valid for a designated period of time (90 days). Id.
An August 25, 1988 letter to Hal Johnson, B L's then-President, from D.A. Reischer, which admitted that Dial-A-Contact was a direct account of B L. The letter discusses several traditional soft lens manufacturers which had taken a "no sales" position with Dial-A-Contact "because of pressure applied by the California Optometric Association . . . . this is one of the reasons why the COA is so insistent upon getting industry support in fighting the battle." (B L 000581-82) Plaintiffs further allege that B L cut off some contact lens sales to Dial-A-Contact Lens, to whom it sold since 1986, the same day the AOA group arrived in Rochester. (September 27, 1989 letter from Johnson to Hundt, DC 00317). While B L claims the mail order terminations are unrelated to the meetings, Plaintiffs argue that a reasonable jury could infer that, given the timing of the terminations, they were related to pressure from the ECP trade groups and this Court concludes that the fact finder could make such an inference.
A letter confirming that Lens Express was established as a direct account of Vistakon in 1987. (Letter from Squeglia, National Sales Manager, to Lens Express dated February 3, 1987. LE000007, Squeglia, Dep. Exh. 1) and that on May 25, 1990 it lost that status. Vistakon's National Sales Manager, Thomas Squeglia. wrote a letter to Dr. Nonnan Ginis explaining that he was cutting off Contact Lens Supply from providing lenses to any patient not seen in Dr. Ginis' private practice (Letter dated November 27, 1989, CLS0001). Ginis previously provided lenses to pharmacies and was both a direct B L and Vistakon account. (See Ginis CID statement, p. 21-25; B L Sales Management report, BL00064681). Prior to the 1989 meeting with the AOA, neither Vistakon nor B L had regular procedures to determine whether an account was with an ECP or an alternate supplier. (Squeglia Deposition at 29, 32, 48; Hollison Deposition 19-20; 8245).
Evidence of a 1993 Vistakon instructional program for ECPs that arguably taught them how to prevent release of patient prescriptions and how to deal with those insistent on receiving prescriptions. (Managing Prescription Requests, W00231). Vistakon also distributed a model prescription release form. (Vist 0165657).
Beginning in 1993, Vistakon provided its national sales force with a special handout for ECPs that contained the advice to refuse prescription requests if the customer did not have an eye exam in the last six months. (Preston to Kelly, et al, January 15, 1993, J 12886-90). Additionally, a July 15, 1992 press release announcing a new package advisory to be placed in the boxes of some replacement lenses. The insert states, "To safeguard your eye health, Bausch and Lomb recommends that you purchase your contact lenses only from your eye care practitioner . . ." (Press Release, BLF 0000032). A genuine issue of material fact exists regarding whether there is a medical basis for this recommendation.
B L's sales staff was provided with promotional materials for their ECP clients. One example is The Communicator which referred to the new SeeQuence lens as "a lens replacement with the eye care professional in mind" which includes "coded lens parameters to strengthen patient control" and "abbreviated expiration dates to encourage patient compliance." (DC 00348-49).
In sum, Plaintiffs argue that: (1) due to the ECP community's demands, there was a material change in Defendants' policies although the policies' language remained relatively constant; (2) after the October 1989, November 1991, and the 1992 meetings with the AOA there were subsequent changes in the Defendant manufacturers' ECP-only policy wording and increased enforcement of that policy; hence, a reasonable fact finder could conclude that a policy change flowed from an agreement between the ECPs' trade organizations and the Defendant manufacturers. Plaintiffs also argue that a reasonable jury could also find that ECPs and their trade organizations conspired among themselves and with the manufacturers to cut off the supply of lenses to the alternate channels and that the Defendant manufacturers either explicitly or implicitly assisted in this effort, which was accepted by the ECP community.
In Helicopter Support Systems v. Hughes Helicopter, Inc., 818 F.2d 1530, 1535-36 and n. 6 (11th Cir. 1987), the Eleventh Circuit held that evidence following a complaint from the dealer to a manufacturer complaining about a discounter, then notifying the dealer that "corrective action has been taken" and requesting the dealer notify of it of further problems combined with the dealer's "thank you" created an inference that the dealer agreed to notify the manufacturer and the manufacturer agreed to take similar corrective action, if needed, in the future. In dicta, the Eleventh Circuit stated that this evidence met the Monsanto requirements "precisely." Id. This Court finds that the circumstantial evidence produced by the Plaintiffs precludes the granting of summary judgment because if believed it could establish consciously parallel behavior in the disposable contact lens market as well as at least one necessary "plus factor" tending to exclude the possibility that the Defendants were merely engaging in conscious parallelism. When taken as a whole, this Court finds that Plaintiffs have produced more than ample evidence to satisfy Monsanto and establish a genuine issue of material fact regarding whether the Defendants violated antitrust law.
IV. Conclusion
With the exception of the applicability of various states' "little FTC Act" statutes to this cause of action, which this Court will decide seperately, this Court finds that, taken as a whole, the Plaintiffs have proffered ample evidence to create a genuine issue of material fact regarding whether Defendants alleged illegal activities amounted to a restraint of trade.
Accordingly, it is hereby ordered:
Defendants' motions for summary judgment, enumerated previously in this Order, are DENIED.
DONE AND ENTERED.