1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-18-1997

Barton & Pittinos v. SmithKline Beecham

Precedential or Non-Precedential:

Docket 96-1941

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Recommended Citation

"Barton & Pittinos v. SmithKline Beecham" (1997). 1997 Decisions. Paper 161.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/161
Filed July 18, 1997 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 96-1941 

BARTON & PITTINOS, INC. 

Appellant 

v. 

SMITHKLINE BEECHAM CORPORATION 

ON APPEAL FROM THE 

UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

(D.C. Civ. No. 95-CV-6619) 

Argued: June 13, 1997 

Before: COWEN, ALITO, and GARTH, Circuit Judges 

(Opinion Filed: July 18, 1997) 

BARBARA W. MATHER (Argued) 

PHILIP H. LEBOWITZ 

NICOLE D. GALLI 

PEPPER, HAMILTON & SCHEETZ 

3000 Two Logan Square 

Eighteenth and Arch Streets 

Philadelphia, PA 19103 

KENNETH H. ZUCKER 

PEPPER, HAMILTON & SCHEETZ 

1235 Westlakes Drive, Suite 400 

Berwyn, PA 19312 

 Attorneys for Appellant
JAMES D. COLEMAN (Argued) 

THOMAS B. ROBERTS 

BALLARD SPAHR ANDREWS & 

 INGERSOLL 

1735 Market Street, 51st Floor 

Philadelphia, PA 19103 

 Attorneys for Appellee

OPINION OF THE COURT 

ALITO, Circuit Judge: 

Appellant Barton & Pittinos, Inc. ("B&P") is a 

pharmaceutical marketing company. B&P entered into a 

contract with appellee SmithKline Beecham Corp. ("SKB") to 

market SKB's Engerix-B vaccine for hepatitis-B ("the 

vaccine") to nursing homes. Under the terms of the 

program, B&P would provide the nursing homes with 

information about the vaccine and would solicit orders. 

B&P would then pass the orders to General Injectables and 

Vaccines, Inc. ("GIV"), which would buy the vaccine from 

SKB and then resell it to the nursing homes, with B&P 

receiving a commission. When SKB, B&P, and GIV 

launched this program, SKB, it is alleged, was inundated 

with a flood of complaints from the consultant pharmacists 

who had traditionally supplied the nursing homes with 

SKB's vaccines and other pharmaceutical products. 

Assertedly bowing to pressure from the pharmacists, SKB 

terminated the program. 

B&P brought this action against SKB, alleging that SKB 

conspired with the pharmacists to restrain competition in 

the nursing home market for the vaccine, in violation of § 1 

of the Sherman Act, 15 U.S.C. § 1. B&P also asserted 

claims under state law for breach of contract and unjust 

enrichment. The district court granted summary judgment 

in favor of SKB on B&P's antitrust claim on the ground that 

B&P lacked standing to sue for its alleged injuries under 

the antitrust laws. B&P appealed. We hold that the injury 

alleged by B&P is not the type of injury that the antitrust 

laws were intended to prevent because B&P was not a

 2 
competitor or a consumer in the market in which trade was 

allegedly restrained. Since B&P therefore cannot 

demonstrate "antitrust injury," it lacks standing under the 

antitrust laws. Accordingly, we affirm. 

I. 

In 1991, B&P learned that the Occupational Safety and 

Health Administration would soon require employers whose 

employees might be exposed to blood-borne pathogens to 

educate their employees about the vaccine against 

hepatitis-B and to make the vaccine available to them free 

of charge. See 29 C.F.R. § 1910.1030 (1991). At the time, 

the only manufacturers of the vaccine were SKB and Merck 

& Co. Sensing an opportunity to profit from this regulatory 

mandate, B&P developed a plan to market the vaccine to 

nursing homes. SKB agreed to pay B&P a flat fee in 

exchange for B&P's preparation and distribution to the 

nursing homes of educational materials regarding the 

vaccine and the regulations. B&P performed the agreedupon work and SKB compensated it according to the 

contract. The next step in the program was for B&P to 

telephone the nursing homes (under the trade name "The 

Medical Phone Company") to solicit orders for the vaccine. 

B&P contends that SKB agreed to pay it a commission of 

7% on sales of the vaccine as compensation for these 

telemarketing services.1 

Because B&P, as a marketing company rather than a 

pharmaceutical company, lacked the required license to 

buy, possess, or sell the vaccine, the program did not call 

for B&P actually to distribute the vaccine to the nursing 

homes. Rather, B&P's function was to drum up demand for 

the vaccine, solicit orders from the nursing homes, and 

pass the orders along to GIV, a licensed medical supply 

house. GIV would fill the orders by purchasing the vaccine 

from SKB and would then resell the vaccine to the nursing 

homes. 

The program debuted in January 1992. Before the 

_________________________________________________________________ 

1. In accordance with the law governing summary judgment, in our 

recitation of the facts we accept B&P's evidence as true. 

 3 
commencement of this program, the nursing homes had

traditionally obtained their vaccines and other 

pharmaceutical products from "consultant pharmacists." A 

nursing home's consultant pharmacist would educate 

nursing home administrators and staff about 

pharmaceutical products and regulatory requirements; 

assist the nursing home in storing its pharmaceuticals and 

in keeping the required records relating to their 

prescription; negotiate directly with pharmaceutical 

manufacturers regarding price and other terms of purchase 

of pharmaceutical products; and take orders from the 

nursing home, purchase the desired products from the 

manufacturers, and resell them to the nursing home.

Because the SKB/B&P/GIV program promised economically 

advantageous terms to the nursing homes, the nursing 

homes accorded the program a favorable reception. 

The nursing homes' gain, however, was the pharmacists' 

loss. Almost immediately, many individual pharmacists as 

well as pharmacist trade associations complained to SKB 

that the program bypassed and undercut them on price, 

and some threatened to boycott SKB products if SKB 

continued the program.2 In March 1992, following meetings 

with pharmacist groups, SKB discontinued the program. 

SKB terminated the telemarketing and distribution program 

involving B&P and GIV and reverted to its prior practice of 

distributing the vaccine through consultant pharmacists. 

Even after SKB ended the program, it continued to explore 

the possibility of continuing to employ B&P to help to 

market the vaccine, but the parties were unable to reach 

agreement. 

II. 

B&P filed this action in October 1995. Under § 4 of the 

Clayton Act, 15 U.S.C. § 15, B&P claimed that it was 

entitled to treble damages for SKB's conspiracy with the 

pharmacists to restrain trade in the market for sales of the 

vaccine to nursing homes, in violation of § 1 of the 

_________________________________________________________________ 

2. Some state regulatory bodies, apparently at the instigation of 

pharmacist groups, also expressed concern to SKB and GIV about the 

program, but it does not appear that any official action was taken. 

 4 
Sherman Act, 15 U.S.C. § 1. B&P also pled claims under 

state law, alleging that SKB had breached its contract with 

B&P by terminating the telemarketing program and 

refusing to pay B&P any commission and, in the 

alternative, that SKB had been unjustly enriched by the 

receipt of B&P's telemarketing services. 

In August 1996, SKB moved for summary judgment, 

contending that B&P lacked antitrust standing because it 

was neither a competitor nor a consumer in the market in 

which trade was allegedly restrained. The district court held 

that B&P had failed to show that its alleged injury

constituted "antitrust injury" and granted the motion. 

Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 942 F. 

Supp. 235, 237 (E.D. Pa. 1996). The court also held that 

the existence of more direct victims than B&P and the 

danger of complex apportionment of damages among those 

injured by the alleged conspiracy weighed againstfinding 

that B&P had antitrust standing. Id. at 237-38. With B&P's 

lone federal claim dismissed, the court declined to exercise 

supplemental jurisdiction over the state law claims and 

dismissed them without prejudice. Id. at 238. 

In this appeal, B&P argues that the district court erred in 

finding as a matter of law that it did not compete with the 

pharmacists. B&P submits that the record contains 

evidence from SKB, Merck, and the pharmacists themselves 

showing that they all believed that B&P competed with the 

pharmacists. We exercise plenary review over the district 

court's grant of summary judgment. McCarthy v. Recordex

Services, Inc., 80 F.3d 842, 847 (3d Cir.), cert. denied, 117 

S.Ct. 86 (1996).3 

_________________________________________________________________ 

3. In our review, we "apply the same test the district court should have 

used initially." In re Unisys Sav. Plan Litig., 74 F.3d 420, 433 n.10 (3d 

Cir.), cert. denied, 117 S.Ct. 56 (1996). Summary judgment should be 

granted "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 a judgment as a matter of law." Fed. R. Civ. P. 56(c). On a 

summary judgment motion the court must construe the evidence in the 

light most favorable to the non-moving party and give that party the 

benefit of all reasonable inferences. See In re Unisys, 74 F.3d at 433 

n.10. 

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III. 

Section 4 of the Clayton Act, 15 U.S.C. § 15, provides 

that "[a]ny person who shall be injured in his business or 

property by reason of anything forbidden in the antitrust 

laws" may maintain a private action for treble damages. 

Despite this broad statutory language, however, the

Supreme Court has held that the common-law background 

of the antitrust laws requires a narrower, less literal 

reading. See Associated General Contractors of California,

Inc. v. California State Council of Carpenters, 459 U.S. 519, 

529-33 (1983) ("AGC"). In developing the concept of 

antitrust standing, the Court "focus[ed] on the nature of the 

plaintiff's alleged injury," asking "whether it is of the type 

that the antitrust statute was intended to forestall." Id. at 

538-39. If the injury is not of the requisite type, even 

though the would-be plaintiff may have suffered an injury 

as a result of conduct that violated the antitrust laws, he or 

she has no standing to bring a private action under the 

antitrust laws to recover for it. In AGC, the Court held that 

because the plaintiff was "neither a consumer nor a

competitor in the market in which trade was restrained," its 

injury was not the type of injury that the antitrust laws 

were designed to prevent. Id. at 539. Therefore, the plaintiff 

might be able to sue under a different statute or commonlaw rule, and a different plaintiff might be able to sue under 

the antitrust laws, but the plaintiff had no standing to sue 

under the antitrust laws. See also Brunswick Corp. v.

Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977). 

The Supreme Court in AGC also discussed other factors 

that must be balanced in order to determine whether a 

plaintiff is a proper party to bring an antitrust claim. See

459 U.S. at 540-44. We have synthesized the Court's

analysis into the following formulation of the factors that 

are relevant in an antitrust standing challenge: 

(1) the causal connection between the antitrust 

violation and the harm to the plaintiff and the intent by 

the defendant to cause that harm, with neither factor 

alone conferring standing; (2) whether the plaintiff's 

alleged injury is of the type for which the antitrust laws 

were intended to provide redress; (3) the directness of 

the injury, which addresses the concerns that liberal 

 6 
application of standing principles might produce 

speculative claims; (4) the existence of more direct 

victims of the alleged antitrust violations; and (5) the 

potential for duplicative recovery or complex 

apportionment of damages. 

In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 

1144, 1165-66 (3d Cir. 1993) ("Lake Erie"). 

The district court in this case relied principally on the 

second factor that we identified in Lake Erie. On the basis 

of its conclusion that B&P was not a competitor or a 

consumer in the market allegedly restrained, the court held 

that B&P's injury was not of a type that the antitrust laws 

were designed to prevent. See Schuylkill Energy Resources,

Inc. v. Pennsylvania Power & Light Co., 113 F.3d 405, 415 

(3d Cir. 1997) ("A plaintiff who is neither a competitor nor 

a consumer in the relevant market does not suffer antitrust 

injury") (quoting Vinci v. Waste Management, Inc., 80 F.3d 

1372, 1376 (9th Cir. 1996)). 

Antitrust injury is a necessary but insufficient condition 

of antitrust standing. Lake Erie, 998 F.2d at 1166 

("antitrust injury is more than a component to be factored 

in a standing analysis, it must be present in every case") 

(citation omitted). Even a plaintiff who can show antitrust 

injury may lack antitrust standing, because the remaining 

AGC factors may weigh against allowing him or her to sue 

under the antitrust laws. Cargill, Inc. v. Monfort of Colorado,

Inc., 479 U.S. 104, 110 n.5 (1986) ("A showing of antitrust 

injury is necessary, but not always sufficient, to establish 

standing under § 4, because a party may have suffered 

antitrust injury but may not be a proper party under § 4 for 

other reasons").4 

A. We thus turn to the question whether B&P adduced

sufficient evidence to permit a reasonable factfinder to 

_________________________________________________________________ 

4. The antitrust injury requirement in the context of antitrust standing 

can thus be seen as analogous to the constitutional minimum required 

for standing to sue in federal court in general, and the other AGC factors 

may be thought of as prudential limits on standing that are particularly 

necessary or appropriate in the antitrust context. Cf. Florida Seed Co.,

Inc. v. Monsanto Co., 105 F.3d 1372, 1374 (11th Cir. 1997). 

 7 
conclude that it competed in the market in which trade was 

allegedly restrained, such that its alleged injury would 

constitute "antitrust injury."5 The answer to this question 

depends on how that market is defined. B&P's complaint 

defined the relevant market as "all hepatitis-B vaccine sold

to nursing homes" in the United States. (App. 25) 

(emphasis added). It alleged that the unlawful conspiracy 

aimed "to eliminate B&P as a competitor in the distribution

of hepatitis B vaccine to nursing homes . . . ." (App. 25) 

(emphasis added). Because it is undisputed that B&P never 

"sold" or "distributed" or sought to sell or distribute any 

vaccine to anyone, however, it is plain that B&P was not a 

competitor in the market for sales of the vaccine. 

In its briefs and at oral argument, B&P espoused a 

slightly different view of the relevant market and its role 

therein. B&P argues that the evidence demonstrates that 

"Barton & Pittinos and its program competed with and 

displaced the pharmacists." Appellant's Br. at 15. In our 

view, the key words in this quoted statement are "and its 

program." B&P is surely correct in its assertion that the 

program whereby B&P marketed the vaccine and GIV filled 

the orders solicited by B&P competed with the pharmacists. 

The SKB/GIV/B&P program, taken as a whole, offered a 

package of marketing and distribution of the vaccine -- a 

package that was equivalent to the package offered by the 

consultant pharmacists. We agree with B&P that the 

pharmacists' efforts to kill the SKB/GIV/B&P program 

show that they viewed it as competition. And we agree with 

B&P that the nursing homes' eagerness to abandon the 

pharmacists in favor of the SKB/GIV/B&P program shows 

that the package of goods and services offered by the 

SKB/GIV/B&P program was reasonably interchangeable 

with the package of goods and services offered by the 

pharmacists. See, e.g., Brown Shoe Co. v. United States, 

370 U.S. 294, 325 (1962) ("The outer boundaries of a 

product market are determined by the reasonable 

interchangeability of use or the cross-elasticity of demand 

between the product itself and substitutes for it."). 

But the question presented in this appeal is whether B&P 

_________________________________________________________________ 

5. B&P does not contend that it was a consumer in the relevant market. 

 8 
was in competition with the pharmacists, not whether "the 

program" was. In order to hold that B&P was in competition 

with the pharmacists, we would have to conclude that what 

B&P offered was reasonably interchangeable with what the 

pharmacists offered. We agree with the district court that 

the record cannot support such a determination. B&P's role 

in the program was limited to marketing the vaccine; 

without GIV, there was no vaccine, only information about 

it. Thus, the nursing homes (the consumers in the relevant 

market here) were able to abandon the pharmacists in favor 

of the SKB/GIV/B&P program, but they could not have

abandoned the pharmacists in favor of B&P alone. Doing so 

would have left the pharmacists without the most 

important part of the package of goods and services offered 

by SKB, GIV, and B&P together: the vaccine itself. 

Consequently, there was no cross-elasticity of demand as 

between the pharmacists' offerings and B&P's offerings; no 

matter how much the pharmacists raised the price of the 

package of the goods and services that they offered, the 

nursing homes could not have switched to B&P.6 

B. Perhaps anticipating the above analysis, B&P 

contends that "the fact that Barton & Pittinos worked with

GIV to provide some elements of the competing package 

does not mean that Barton & Pittinos was not a competitor 

of the consultant pharmacists." Appellant's Br. at 23 

(emphasis added). We accept the basic premise of B&P's 

argument, which is that market definition is not determined 

by formal labels, but rather takes into account "the realities 

of competition." Weiss v. York Hosp., 745 F.2d 786, 826 (3d 

Cir. 1984). And we acknowledge that in defining markets 

some courts "have recognized that a product should not be 

excluded from a market because it requires an additional

input in order to be a reasonable substitute for other 

products in the market." Bhan v. NME Hosp., Inc., 772 F.2d 

1467, 1471 (9th Cir. 1985) (emphasis added). But we reject 

_________________________________________________________________ 

6. B&P attempts to mask this defect in its argument by referring to the 

program as the "Barton & Pittinos program" rather than the 

SKB/GIV/B&P program. It thus asserts that "Barton & Pittinos offered 

a better package at a lower price than the consultant pharmacists." 

Appellant's Br. at 22. As explained in the text, this assertion is simply 

untrue. 

 9 
B&P's argument, because "the realities of competition" in 

this case are that the nursing homes could not have

switched from the pharmacists to B&P alone and because 

we do not believe that the product itself can fairly be 

described as merely "an additional input." 

The cases upon which B&P relies are readily 

distinguishable. In Telex Corp. v. Int'l Business Mach. Corp., 

510 F.2d 894, 914-19 (10th Cir.), cert. dismissed, 423 U.S. 

802 (1975), the court held that Telex's and IBM's computer 

products were in the same market even though they were 

incompatible, because the "interchange of these products" 

was "easy and practicable." Similarly, in Bhan, the court 

held that nurse anesthetists and M.D. anesthesiologists 

competed in the same market even though nurse 

anesthetists required the "input" of "the supervision of an 

attending physician," because "such supervision is not only 

easily obtainable but is actually a common practice in the 

medical profession." 772 F.2d at 1471. In contrast, in this 

case it is clear that the "additional input" required by B&P 

-- if the vaccine itself can be so characterized -- was not 

"easily obtainable" or "practicable." Indeed, B&P was legally 

barred from buying, possessing, or selling the vaccine 

because it lacked the required prescription-drug license. Cf. 

Schuylkill, 113 F.3d at 415-16 (plaintiff could not show 

antitrust injury where it was prohibited by law from 

competing in the relevant market). 

B&P relies most heavily on Yellow Pages Cost

Consultants, Inc. v. GTE Directories Corp., 951 F.2d 1158 

(9th Cir. 1991). In that case, GTE, the defendant, published 

telephone directories and sold advertisements in them. 

Advertisers had a choice between purchasing 

advertisements and advertising consulting services as a 

package offered at one price by GTE or purchasing 

advertising consulting services from the plaintiffs, 

independent companies that placed ads with GTE. When 

GTE ended its practice of allowing independent companies 

to place ads, the plaintiffs remained free to sell advertising 

consulting services, but their business suffered because 

advertisers found it inconvenient to deal with the plaintiffs 

once they could no longer place the ads as well. The Ninth 

Circuit held that the plaintiffs had standing because they 

 10 
competed with GTE in the market for yellow-pages 

advertising consulting services. Id. at 1161-62. 

Yellow Pages might help B&P if the court had held that 

the plaintiffs competed with GTE in the market for sales of 

yellow-pages advertising despite the fact that the plaintiffs 

did not actually sell yellow-pages ads, but rather merely 

information about yellow-pages ads. If such were the case, 

the analogy to the instant case would be good: B&P, like 

the Yellow Pages plaintiffs, offered marketing and 

educational services concerning a product, but did not offer 

the actual product itself. But this is not what the Yellow

Pages court held. The Ninth Circuit has reiterated in 

subsequent cases that its holding in Yellow Pages was that 

"the plaintiffs and defendants did compete in the same 

market: the market for advising yellow page advertisers as 

to the form, content, and cost of yellow page advertising." 

Amarel v. Connell, 102 F.3d 1494, 1510 (9th Cir. 1997). 

Accord American Ad Management, Inc. v. GTE Corp., 92 

F.3d 781, 786 n.7 (9th Cir. 1996). Yellow Pages thus does 

not provide a basis for holding that by marketing the 

vaccine B&P competed in the market for the package of 

marketing and distribution of the vaccine.7 

B&P has not pointed us to, and we have been unable to 

locate, any case holding that an advertiser or broker has 

standing to sue for antitrust violations restraining trade in 

the market for sales of the good or service advertised or 

brokered. On the contrary, courts have held that 

advertisers and brokers of a good or service are not 

competitors of companies that actually supply the good or 

service. See, e.g., Bodie-Rickett and Assoc. v. Mars, Inc., 957 

F.2d 287, 290-91 (6th Cir. 1992); S.D. Collectibles, Inc. v.

Plough, Inc., 952 F.2d 211, 213 (8th Cir. 1992).8 

_________________________________________________________________ 

7. B&P does not contend that a distinct market exists exclusively for the 

marketing of the vaccine. 

8. The district court, in reaching the same conclusion as we have, relied 

on evidence such as the deposition of B&P's president James Pittinos, in 

which Pittinos described B&P as an advertising and marketing agency 

which did not compete with wholesalers and pharmacists. See 942 F. 

Supp. at 237. 

 11 
We therefore conclude that B&P did not compete with the 

pharmacists in the market for the package of marketing 

and distribution of the vaccine. Because B&P was thus not 

a competitor or a consumer in the market in which trade 

was allegedly restrained by the antitrust violations pled by 

B&P, we hold that B&P's alleged injury is not "antitrust 

injury," meaning injury "of the type that the antitrust 

statute was intended to forestall." AGC, 459 U.S. at 539. 

Accordingly, we agree with the district court's 

determination that B&P lacked standing to institute this 

private treble-damages action.9 

IV. 

For the foregoing reasons, we affirm the judgment of the 

district court. 

A True Copy: 

Teste: 

Clerk of the United States Court of Appeals

for the Third Circuit

 

_________________________________________________________________ 

9. Because B&P fails the antitrust injury requirement, it would lack 

standing even if the other AGC/Lake Erie factors favored it. We therefore 

need not address the district court's findings that there were more direct 

victims of the alleged conspiracy than B&P and that B&P's claims 

presented a danger of complex apportionment of damages. See 942 F. 

Supp. at 238. In light of our affirmance of the grant of summary 

judgment to SKB on B&P's antitrust claim, we affirm as well the district 

court's decision not to exercise supplemental jurisdiction over B&P's 

state law claims. B&P may properly pursue its contractual claims 

against SKB in state court. 

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