Opinion ID: 6324834
Heading Depth: 2
Heading Rank: 4

Heading: Dismissal of the SAC

Text: On remand, the Providers narrowed their allegations in the SAC to two vertical conspiracies between (1) BD and Car‐ dinal, and (2) BD and McKesson. In other words, the Provid‐ ers dropped their allegations against the GPOs and two other distributors, and the Providers no longer allege a horizontal conspiracy among the remaining distributors. BD, Cardinal, and McKesson all moved to dismiss the SAC for failure to state a claim. The Distributors further argued that the Provid‐ ers lacked Article III standing to sue Cardinal because the Pro‐ viders purchased the Products only from McKesson. The district court agreed with the Defendants and dis‐ missed the case. Marion Diagnostic Ctr., LLC v. Becton, Dickin‐ son & Co., No. 3:18‐CV‐1059‐NJR, 2021 WL 961728 (S.D. Ill. Mar. 15, 2021). Relying on Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457 (7th Cir. 1981), the district court concluded that both Article III and Illinois Brick’s direct‐pur‐ chaser rule require the Providers to show a “sufficient nexus between the defendant’s alleged actions and an injury to plaintiffs.” Id. at 469. The Providers failed to meet this stand‐ ard, in the district court’s view, because any alleged injury from Cardinal’s anticompetitive activity was “vague and ten‐ uous.” Marion Diagnostic Ctr., 2021 WL 961728, at . 10 No. 21‐1513 Even if the Providers had standing to sue Cardinal, the district court concluded they had failed to allege that BD and the Distributors had “a conscious commitment to a common scheme.” Monsanto, 465 U.S. at 768. The court summarized six key allegations and sorted them into two categories: factors showing quid pro quo, and factors showing conscious com‐ mitment. The court concluded that the following allegations were insufficient to show quid pro quo: the Distributors’ sales staff receive bonuses and other incentives, the Distributors re‐ ceive higher distribution fees, and the Distributors benefit from guaranteed purchasing volume from long‐term con‐ tracts. These allegations are essentially recycled from the FAC, which this court already held was insufficient to state a claim in Marion I. The district court then concluded that the following alle‐ gations were insufficient to show conscious commitment: BD’s dominant market share facilitates collusion and there are high barriers to entry; the Distributors’ actions are “contrary to their self‐interest” because they should naturally prefer up‐ stream competition; the Distributors’ contracts with BD in‐ clude agreements to exclude BD’s rivals; the Distributors have the motive to conspire because of BD’s dominance in the mar‐ ket; and the Distributors frequently communicate with BD “beyond what is necessary to merely buy and sell products.” Because the district court concluded that the SAC failed to state a claim, the court did not address Defendants’ related argument that the Providers failed to allege Cardinal or McKesson had market power in the distribution market. The Providers timely appealed. No. 21‐1513 11