next case ation my understanding of and correct me if i'm wrong which you're seeing is that rather than the time as set forth on the schedule as i'm bruce christine and i represent the distributor plaintiffs in this matter since the district court's ruling this court's decision where in general was handed down that was the last series of decisions by various courts deciding the issue whether a health care provider purchasing under g p l contract conveyed direct purchase a standing to the health care provider that purchased through a distributor the other cases would elevate though a valley in the ninth circuit and st francis which was a district court decision affirmed in the eighth circuit each of the courts what that the mechanics of the transaction and that they determine that a warning is the health care provider purchased through a middleman the health care provider was an indirect purchaser and the distributor was the direct purchaser we submit that the warren court's decision is dispositive here fours well no and i would the reason i say that is there is no agency exception in this circuit then spike address that directly so the argument was whether there was ownership and control which is the only exception requested of the court in then spike to divert from and create effectively in a new exception the supreme court in the till a court said there are no exceptions other than to a cost plus requirement contracts as your fixed amount plus course plus which we don't have here nobody is claiming here and two is ownership of control but there's been a lot of confusion about the facts and i think it's important to actually look at the fact with warren for us for  fact the the goods are taken into the distributors inventory titles transferred to the distributor the distributor pays for the goods they kick knowledge if in fact the and they use the word  distribute if the distributor distributes it to a specifically to a health care provider at that point if the distributor were stablish is to specifically the the supplier in this case back then that when the distributors actually acquire the products from back to they know which of those products are going to be sold in contracts so you know they all go into inventory they order they've knowledge also in their brief that distribute is by on their own estimates in other words they do their demand estimates for totality they take the risk of loss they deal with this there's a confusion about the agency and if i can explain why and i think it's very very important to understand the factual setting they admit in their briefs that the operative documents documents between in one case the supplier and the g p o which would be no vacation in this case and then a second  the the health care provider this agent were party to the that's where the price comes in in both those agreements specifically it provides in the first agreement between  l and becton that the beckton will make product to available to the authorized distributor for purchase to be resold specifically to the member which is the healthcare provider basic base price plus whatever is negotiated for the up charge what happened was specifically it was a third document it's called an agreement but it was the deal in notification that is a document between specifically the becket sent out to the authorised distributors and this is very very important to understand conceptually what happened they were concerned about retail price names and it's referred to in the brief so what they did was and  is that neither the g p o or the health care providers are party to it if you want to quote an agreement this is totally between becton and the suppliers and would be inconsistent with the actual contracts of the g p o entered into but they weren't even party to it what they did was specifically set up that instead of having two steps of the transaction on paper where the specifically the the seller the resupply of back that sell to the distributor caudill who resells who resells to the healthcare provider in this case medstar they set up three steps and this is critical if you look at page twenty one of the district court's opinion pacifically refers to a manual that describes the transaction in the three steps it says specifically step one and it talks about in the premise that the trying to avoid retail price made its step one the product is sold by backed in to the distributor title passes to the distributor and product which may have been eventually sold under a rebate contract is not physically distinguished from other becton products it's taken into the inventory the distributor steptoe the product is shipped by the distributor to the customer upon shipment title passes the back to the product is we purchased by back to the risk of  the product was in transit around collectible siegel's is back and that's a second transaction and then it talks about a third parent action where back then we sells the product to medstar do you think the judge when  want the first judge will announce was overly concerned about the use of the term service agent i think it was i don't think it's an exception but it doesn't affect the first transaction one of the problems and we wrote this in our brief and nobody has responded to it is under the first step and we buy it we were invoice we take ownership of the property we pay for it we have a claim as a distributor the claim under had no issue occurs that's the moment we purchase it somehow we're being di has to why what is specifically finding is downstream sales first of all i believe that this whole basic notification is a fiction there's not a single internal document immediate bya at the moment you purchase any we sell is irrelevant to actually the one thing and the standard is how do you become a distributor who doesn't know how does that relationship between the two contracts i just explained i just mention this contract between the g would be invalid but there is it's a fiction it never actually was implemented and what they did what defendants do is they try to conflate facts because they recognize two things the judge judge will an heiress originally applied an economic substance test to determine who is the economic actor you recognize other quotes like delaware valley apply the media buy a test with the which we believe is absolutely consistent with you you tell a caught wind of cases but one in general cause that downs and the other guy asked what what is the viability of an economic substance test post one jim doesn't exist it didn't exist before he was relying on language and specifically in d fog which actually applied the mechanics of the purchase test but they threw it on line but it also means it's also the economics of things transaction it was a throw in line at the court had  morning on morning maybe i should start by talking a little bit about our view of war in general war and war in general i think was actually correctly designed and i think the court there did an economic realities analysis in the favor and competing there were competing claims and the reason i say it was correctly decided is you are correct judge fisher the distributor used by war in general was the result there was evidence in the record that distributor set the price the only claim or in general made being a direct purchaser was one general was able to file for a rebate on the volume it had a contract if you were entitled to file for rebates on a certain volume of purchases much like as the crew as the panel hearing the case said it's much like buying shampoo at the grocery store if you get a rebate coupon and you can send it in that doesn't make you that doesn't make you the direct purchaser of the shampoo the grocery store was the direct purchaser of the shampoo for purposes of an antitrust claim so warren general i think is correct and i have no disagreement with the bright line rule that everyone keeps advocating the question wants and every distributor want in their inventory becton has to arrangements with authorized distributors and becton has a veto right as to who can be authorized it's triggered the first arrangement is they sell to the authorized distributors at what they call the highest price the reseller price with the testimony of their thirty six wins if he gets that price and he can then resell that that is the result price he gets into and tori what the hospitals are going to order that one that goes into his m and tory actually when he receives a shipment becton takes recognizes revenue at the hospital price on part of that shipment and and at his price so he has a dual function he is the he is the delivery agent and the servicing agent for the sales back to his making at the price spec and has negotiated and he's an independent wholesaler under completely separate agreement when he's selling in his own account and that was what judge larry smith an enormous amount of time he looked at all the evidence he looked at all the agreements he read the agreements he looked the testimony concerning the agreement he looked at the two unreported expert reports we put the in the in the dealer agreement between backed and the distributors to be a distributor and you have to agree that you're going to go through that process you're going to store their inventory you're going to go collect there you're going to send your money you're going to send that to the hospital you're going to collect buttons money you're going to remit beckton now there's been a lot of conversation in this courtroom about payment the testimony from back then was very clear a distributor even though he's invoiced at the the hospitals two different price points in the end that the point of that would be that back to know and so does the distributor a part of what sitting in my warehouse for beckons account is going to go out to a hospital this in three to five days and i have to go collect beckons money even though he receives an invoice saying all this inventory is at a higher price the testimony from back then thirty six when this was no distributor ever has to pay that gap that is i'm transferring title to you i'm now taking time when my customer orders title returns to me and i'm delivering title to the hospital so the title did move and to mr gerson for it is a factor but judge larry looked at completely black and white the distributor negotiated the price there distributed to set the price anywhere the distributor wanted to set the price the distributor bought it into his inventory and then sold it to the hospital and then amgen came and distributed played in general wholesale amgen comes to the hospitals and says would like you to be in a rebate program you buy more of this you send us your proof you've bought it and we'll send you money but there was no agency arrangement of the type here this is one of the unique characteristics this case and it distinguishes it from all the cases here you have a monopoly seller becton dictating a term for the distributor which is the agreement that you sell this you will deliver this as my servicing agent at a price i've negotiated which is lower than the price i sell to you you will collect my money and you will remit and you will make no money on the transaction you will sell and  were made to me my money now why would distributor do that there's testimony in the record that explains that the distributor wants access to the hospitals so that he can sell other things in the hospital he's got his own wine and many of them have their own line of goods and they want access and they know language in the contract that specify the circumstances that if the customers don't want it if it's rejected it can be returned back then there's somewhat of an opaque language in the contract about return rights but mr goldman in his testimony  warehouse where the the items are stored burned down an insurance policy had lapsed that week before who has the risk of loss in the process well as i understand we never got to the issue of beckons insurance policy but the but this is very whether or not there is insurance is not dispositive of whether or not the distributor has risk in the sense that that's right and he has absolutely no market upside which is the most important point he cannot buy at the prices the hospitals buy  can't sell it without the ability to return it if he can't resell the hospitals constitutes seventy four percent of the market they're ordering syringes daily but the price point to the distributor of the one that is back in calls the authorized reseller price is always higher than the price to the hospitals and back then is very diligent they will not they they have the distributor police the hospitals to make sure that the hospitals are we selling so the those intent is justified as there are multiple price points in the market we sell to the distributor what they call the reseller market price and they sell to the hospitals at a lower price and in that scenario they have carefully converted the distributor into an agent and the value best case and just one areas correctly understood one second in one nine hundred sixty four signed a consent decree much like general electric signed the turn of the century with united states and the greed not to gauge and resale price maintenance you there's an exception there consent decree as there is an exception in the law one can't engage in resale price mean that's with an agent your agent is you they been used they clearly drafted the agency document with clear intent of defending themselves against resale price mean this claim because in that capacity the distributor as an agent is back then and can't conspire with b section one purposes that's the passage you read your earlier just laurie's opinion now what happens here along comes a change of the supreme court re so place maintenance as of two thousand and seven is no longer per se illegal now it's rule of reason and all of a sudden act and against a distance itself from the positions it's taken throughout the litigation but the facts are the facts maybe the consequences of not having agents is no longer accused of recent presidents but there's still an agency relationship or an agency relationship the whole time and just an aries found the agency relationship continued even after they took the word in two thousand and six servicing agent and changed it to distribution a we did not argue that below we are simply arguing that we they are backed ins agent when we buy from them we're buying from back then however were ever title goes they're an agent as an agent their principal agency is very carefully defined result in the fourth circuit which is people routinely defend the section one claims on the basis for conspiracy to engage and resell price means a basis he's made he's me you can't conspire with me that's what this agency thank you how does moses a woman i represent back in dickinson i'd like to make three points if i can first with respect to the dealer notification form whatever it means it did not wipe out the first sale the first sale took place between  the distributors there is no issue about that there was risk of loss and his judgment point asked in his question when the distributor took that into inventory it was the distributors at that time nothing in the deal in order for cation form changes that and nothing changes the mechanics of the transaction there isn't any actual repurchase five x in from the distributor and we sell no documents no money changes hands and also with respect to the agent isn't relevant it's whether you control them and my friend just acknowledge that they are not asserting we control cardinal obviously we don't cardinals one of the largest companies in the in the in the world where a large company then much larger they are a major distributor of all medical and surgical products and nothing changes in the deal notification form changes the admissions nothing changes there pleading a joint appendix a one forty one paragraph sixteen where they say they purchased second dickinson their words and this court in dense playa page three sixty three said that means if you purchase through someone you are the second purchaser the purchase of the person you got it from it is the first it doesn't change the language of the new deal or acquisition agreement which is the agreement between becton and the g p o setting up this whole arrangement which says at joint appendix three to ninety six quote that the supplier quote makes available for purchase by the of this point was dealt with in the st francis case where they had precisely this type of form with that refer to multiple sales and agencies and so forth that's afoot no forty nine of page eleven o five of st francis and we have that form itself in the record a joint appendix three six one four it is virtually identical i don't select a very briefly respond to something that's in just one hour supposing that wasn't mentioned but it's important judgment page eighteen and they know they were informing the court appears there i'm sorry your informing the court of the mistake appears there in what we did before he before his opinion we told him that was a mistake and i just would like to say that our friends obviously know that it was a mistake or so low in their brief they were twice quote that interoperate areas or they never affirmatively assert that they pay us because they know it's not true because they so testified for example right answer correct if the they came through distributor so they acknowledged they pay the distributor and that was just a mistake i want to make sure was clarified with the court like me to address the issue of our changing positions  no i think time is of the thank you very much still i would just conclude by saying this is an interesting discussion but it demonstrates the need for a bright line rule once you determine who the first buyer is that's the end of the discussion and what the insurance is what all of these complications are is exactly what the supreme court and this court in unworn general determined we should not have to look at thank you thank you thank you thank you very much counsel the case was well argued and vigorously so and will take it under advi