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. e du/thir dc ir c uit_1997/161Filed 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 AppellantJAMES 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. ("S KB") to market SKB's Engerix-B vaccine for hepatitis-B ("th e 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 ord ers. B&P would then pass the orders to General Injectabl es 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 inun dated with a flood of complaints from the consultant phar macists who had traditionally supplied the nursing homes wi th 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 competit ion in the nursing home market for the vaccine, in violati on of § 1 of the Sherman Act, 15 U.S.C. § 1. B&P also asserte d
claims under state law for breach of contract and u njust enrichment. The district court granted summary judg ment in favor of SKB on B&P's antitrust claim on the gro und 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 a ntitrust laws were intended to prevent because B&P was not a

2competitor or a consumer in the market in which tra de was

allegedly restrained. Since B&P therefore cannot demonstrate "antitrust injury," it lacks standing u nder the antitrust laws. Accordingly, we affirm.

I.

In 1991, B&P learned that the Occupational Safety a nd 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 th em 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 re gulatory 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 th e vaccine and the regulations. B&P performed the agre edupon 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 v accine. B&P contends that SKB agreed to pay it a commission of 7% on sales of the vaccine as compensation for thes e 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 n ursing 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 su pply house. GIV would fill the orders by purchasing the vaccine
from SKB and would then resell the vaccine to the n ursing
homes.

The program debuted in January 1992. Before the

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1. In accordance with the law governing summary jud gment, in our recitation of the facts we accept B&P's evidence as true.

3commencement of this program, the nursing homes had

traditionally obtained their vaccines and other pharmaceutical products from "consultant pharmacist s." 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 pharmaceutic als and in keeping the required records relating to their prescription; negotiate directly with pharmaceutica l manufacturers regarding price and other terms of pu rchase of pharmaceutical products; and take orders from th e nursing home, purchase the desired products from th e manufacturers, and resell them to the nursing home. Because the SKB/B&P/GIV program promised economical ly advantageous terms to the nursing homes, the nursin g homes accorded the program a favorable reception.

The nursing homes' gain, however, was the pharmacis ts' loss. Almost immediately, many individual pharmacis ts as well as pharmacist trade associations complained to SKB that the program bypassed and undercut them on pric e, and some threatened to boycott SKB products if SKB continued the program.2 In March 1992, following me etings with pharmacist groups, SKB discontinued the progra m. SKB terminated the telemarketing and distribution p rogram involving B&P and GIV and reverted to its prior pra ctice of distributing the vaccine through consultant pharmac ists. Even after SKB ended the program, it continued to e xplore 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 wa s entitled to treble damages for SKB's conspiracy wit h the pharmacists to restrain trade in the market for sal es of the vaccine to nursing homes, in violation of § 1 of th e

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2. Some state regulatory bodies, apparently at the instigation of pharmacist groups, also expressed concern to SKB an d GIV about the program, but it does not appear that any official a ction was taken.

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

state law, alleging that SKB had breached its contr act 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 becau se it was neither a competitor nor a consumer in the mark et 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 moti on. 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 t he danger of complex apportionment of damages among th ose injured by the alleged conspiracy weighed againstfi nding 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 thems elves showing that they all believed that B&P competed wi th the pharmacists. We exercise plenary review over the di strict court's grant of summary judgment. McCarthy v. Reco rdex Services, Inc. , 80 F.3d 842, 847 (3d Cir.), cert. denied , 117 S.Ct. 86 (1996).3

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3. In our review, we "apply the same test the distr ict 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, i f any, show that there is no genuine issue as to any material fact and that t he 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 gi ve that party the
benefit of all reasonable inferences. See In re Uni sys , 74 F.3d at 433
n.10.

5III.

Section 4 of the Clayton Act, 15 U.S.C. § 15, provi des that "[a]ny person who shall be injured in his busi ness or property by reason of anything forbidden in the ant itrust laws" may maintain a private action for treble dama ges. Despite this broad statutory language, however, the Supreme Court has held that the common-law backgrou nd of the antitrust laws requires a narrower, less lit eral reading. See Associated General Contractors of Cali fornia, 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 nat ure of the plaintiff's alleged injury," asking "whether it is of the type
that the antitrust statute was intended to forestal l." 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 restrai ned," its injury was not the type of injury that the antitrus t laws were designed to prevent. Id . at 539. Therefore, the plaintiff might be able to sue under a different statute or c ommonlaw rule, and a different plaintiff might be able t o sue under the antitrust laws, but the plaintiff had no standi ng 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 c laim. See 459 U.S. at 540-44. We have synthesized the Court's analysis into the following formulation of the fact ors that are relevant in an antitrust standing challenge:

(1) the causal connection between the antitrust violation and the harm to the plaintiff and the int ent by the defendant to cause that harm, with neither fact or alone conferring standing; (2) whether the plaintif f's alleged injury is of the type for which the antitru st laws were intended to provide redress; (3) the directnes s of the injury, which addresses the concerns that liber al

6application of standing principles might produce

speculative claims; (4) the existence of more direc t 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 co urt held that B&P's injury was not of a type that the antitr ust laws were designed to prevent. See Schuylkill Energy Res ources, Inc. v. Pennsylvania Power & Light Co. , 113 F.3d 405, 415 (3d Cir. 1997) ("A plaintiff who is neither a compe titor nor
a consumer in the relevant market does not suffer a ntitrust injury") (quoting Vinci v. Waste Management, Inc. , 80 F.3d 1372, 1376 (9th Cir. 1996)).

Antitrust injury is a necessary but insufficient co ndition of antitrust standing. Lake Erie , 998 F.2d at 1166 ("antitrust injury is more than a component to be f actored in a standing analysis, it must be present in every case") (citation omitted). Even a plaintiff who can show a ntitrust injury may lack antitrust standing, because the rem aining
AGC factors may weigh against allowing him or her to s ue under the antitrust laws. Cargill, Inc. v. Monfort of Colorado,

Inc. , 479 U.S. 104, 110 n.5 (1986) ("A showing of antit rust injury is necessary, but not always sufficient, to establish standing under § 4, because a party may have suffer ed antitrust injury but may not be a proper party unde r § 4 for other reasons").4

A. We thus turn to the question whether B&P adduced sufficient evidence to permit a reasonable factfind er to

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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, an d 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).

7conclude that it competed in the market in which tr ade 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 compla int defined the relevant market as "all hepatitis-B vac cine sold to nursing homes" in the United States. (App. 25) (emphasis added). It alleged that the unlawful cons piracy aimed "to eliminate B&P as a competitor in the dist ribution of hepatitis B vaccine to nursing homes . . . ." (A pp. 25) (emphasis added). Because it is undisputed that B&P never "sold" or "distributed" or sought to sell or distri bute any vaccine to anyone, however, it is plain that B&P wa s 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 an d displaced the pharmacists." Appellant's Br. at 15. In our view, the key words in this quoted statement are "a nd its program." B&P is surely correct in its assertion th at the program whereby B&P marketed the vaccine and GIV fi lled the orders solicited by B&P competed with the pharm acists. The SKB/GIV/B&P program, taken as a whole, offered a package of marketing and distribution of the vaccin e -- 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 progra m show that they viewed it as competition. And we agr ee with B&P that the nursing homes' eagerness to abandon th e pharmacists in favor of the SKB/GIV/B&P program sho ws that the package of goods and services offered by t he SKB/GIV/B&P program was reasonably interchangeable with the package of goods and services offered by t he 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 o f demand between the product itself and substitutes for it." ).

But the question presented in this appeal is whethe r B&P

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

8was in competition with the pharmacists, not whethe r "the

program" was. In order to hold that B&P was in comp etition with the pharmacists, we would have to conclude tha t what B&P offered was reasonably interchangeable with wha t the pharmacists offered. We agree with the district cou rt 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 r elevant market here) were able to abandon the pharmacists i n favor of the SKB/GIV/B&P program, but they could not have abandoned the pharmacists in favor of B&P alone. Do ing 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 dema nd as between the pharmacists' offerings and B&P's offeri ngs; 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 work ed with GIV to provide some elements of the competing package does not mean that Barton & Pittinos was not a comp etitor 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 de termined by formal labels, but rather takes into account "th e realities of competition." Weiss v. York Hosp. , 745 F.2d 786, 826 (3d Cir. 1984). And we acknowledge that in defining mar kets some courts "have recognized that a product should not be excluded from a market because it requires an addit ional 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

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6. B&P attempts to mask this defect in its argument by referring to the program as the "Barton & Pittinos program" rather t han the SKB/GIV/B&P program. It thus asserts that "Barton & Pittinos offered a better package at a lower price than the consulta nt pharmacists." Appellant's Br. at 22. As explained in the text, th is assertion is simply

untrue.

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

this case are that the nursing homes could not have switched from the pharmacists to B&P alone and beca use we do not believe that the product itself can fairl y be described as merely "an additional input."

The cases upon which B&P relies are readily distinguishable. In Telex Corp. v. Int'l Business M ach. 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 c omputer products were in the same market even though they w ere incompatible, because the "interchange of these pro ducts" was "easy and practicable." Similarly, in Bhan , the court held that nurse anesthetists and M.D. anesthesiolog ists competed in the same market even though nurse anesthetists required the "input" of "the supervisi on 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" requir ed by B&P
-- if the vaccine itself can be so characterized -- was not "easily obtainable" or "practicable." Indeed, B&P w as legally barred from buying, possessing, or selling the vacc ine because it lacked the required prescription-drug li cense. Cf

. Schuylkill , 113 F.3d at 415-16 (plaintiff could not show antitrust injury where it was prohibited by law fro m 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 th em. 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. Whe n GTE ended its practice of allowing independent comp anies to place ads, the plaintiffs remained free to sell advertising consulting services, but their business suffered be cause advertisers found it inconvenient to deal with the plaintiffs once they could no longer place the ads as well. Th e Ninth Circuit held that the plaintiffs had standing becau se they

10competed 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 th e 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 s ame market: the market for advising yellow page adverti sers as to the form, content, and cost of yellow page adver tising."
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 t he 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 brok er has standing to sue for antitrust violations restrainin g trade in the market for sales of the good or service adverti sed or brokered. On the contrary, courts have held that advertisers and brokers of a good or service are no t competitors of companies that actually supply the g ood 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

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7. B&P does not contend that a distinct market exis ts exclusively for the marketing of the vaccine.

8. The district court, in reaching the same conclus ion as we have, relied on evidence such as the deposition of B&P's preside nt James Pittinos, in which Pittinos described B&P as an advertising and marketing agency which did not compete with wholesalers and pharmaci sts. See 942 F. Supp. at 237.

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

pharmacists in the market for the package of market ing
and distribution of the vaccine. Because B&P was th us not a competitor or a consumer in the market in which t rade was allegedly restrained by the antitrust violation s pled by B&P, we hold that B&P's alleged injury is not "anti trust injury," meaning injury "of the type that the antit rust
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 o f the
district court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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9. Because B&P fails the antitrust injury requireme nt, 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 dama ges. See 942 F. Supp. at 238. In light of our affirmance of the gra nt of summary judgment to SKB on B&P's antitrust claim, we affirm as well the district court's decision not to exercise supplemental juris diction over B&P's state law claims. B&P may properly pursue its contr actual claims against SKB in state court.

12