Court Opinion

ID: 3051840
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:37:45.826725+00
Date Added: 2024-06-11T12:13:53.010066
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

DELAWARE VALLEY SURGICAL                  
SUPPLY INC.; NIAGARA FALLS
MEMORIAL MEDICAL CENTER,
               Plaintiffs-Appellees,
BAMBERG COUNTY MEMORIAL                         No. 08-55105
HOSPITAL & NURSING CENTER,
                Plaintiff-Appellant,             D.C. No.
                                               CV-05-08809-JVS
                v.
                                                  OPINION
JOHNSON & JOHNSON; JOHNSON &
JOHNSON HEALTH CARE SYSTEMS
INC.; ETHICON INC.; ETHICON ENDO
SURGERY INC.,
            Defendants-Appellants.
                                          
         Appeal from the United States District Court
            for the Central District of California
          James V. Selna, District Judge, Presiding

                   Submitted April 11, 2008*
                      Pasadena, California

                       Filed April 30, 2008

      Before: Alfred T. Goodwin, Harry Pregerson, and
            Dorothy W. Nelson, Circuit Judges.

                Opinion by Judge D.W. Nelson

  *The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2).

                                4663
          DELAWARE VALLEY v. JOHNSON & JOHNSON       4665

                       COUNSEL

David M. Schiffman, Sidley Austin LLP, Chicago, Illinois,
for the defendant-appellant.

Russell T. Burke, Nexsen Pruet, LLC, Columbia, South Caro-
lina, for the plaintiff-appellant.

Gretchen M. Nelson, Kreindler & Kreindler LLP, Los Ange-
les, California, for the plaintiff-appellee.
4666        DELAWARE VALLEY v. JOHNSON & JOHNSON
                          OPINION

D.W. NELSON, Senior Circuit Judge:

   This appeal stems from a disagreement between two differ-
ent groups of plaintiffs about who has standing as a “direct
purchaser” to bring a claim under federal antitrust laws. One
group consists of Delaware Valley Surgical Supply Company,
Inc., (“DVSS”) and Niagara Falls Memorial Medical Center
(“Niagara”). They are both entities that bought medical sup-
plies directly from Johnson & Johnson and its subsidiaries
(“J&J”). The other plaintiff is Bamberg County Memorial
Hospital & Nursing Center (“Bamberg”), a hospital that had
a contract with J&J setting a list price for the purchase of
medical supplies, but that ultimately purchased its J&J prod-
ucts through a separate contract with a third-party distributor.

   DVSS, Niagara, and Bamberg all brought independent anti-
trust claims against J&J. The district court consolidated the
three cases. Before reaching the merits of the underlying anti-
trust claims, the district court ruled that Bamberg lacked
standing to assert its claim against J&J. The district court rea-
soned that because Bamberg bought its supply through a dis-
tributor and not from J&J, it was not a “direct purchaser.”
Bamberg and J&J both contest that decision through this
interlocutory appeal. We affirm the order of the district court,
and hold that Bamberg lacks standing to pursue an antitrust
claim under a direct purchaser theory.

       FACTUAL AND PROCEDURAL BACKGROUND

   Three plaintiffs brought antitrust actions against J&J aris-
ing from the manufacturer’s contracts with hospitals and their
group purchasing organizations (“GPOs”). This litigation
involves two categories of products: sutures used to close
wounds and endomechanical products (“endos”) used primar-
ily for minimally invasive laparoscopic surgery. The plaintiffs
            DELAWARE VALLEY v. JOHNSON & JOHNSON              4667
are: (1) Bamberg, a hospital; (2) Niagara, a hospital; and (3)
DVSS, a distributor of medical devices.

I.    The Underlying Antitrust Claims

   In December 2005 and January 2006, Bamberg, DVSS, and
Niagara independently filed suit against J&J, claiming they
were direct purchasers of J&J’s endomechanical products.
Their complaints allege that J&J’s conduct is an unreasonable
restraint of trade in violation of § 1 of the Sherman Act, 15
U.S.C. § 1, and an unlawful exclusive dealing in violation of
§ 3 of the Clayton Act, 15 U.S.C. § 14. The plaintiffs further
allege that J&J monopolized or attempted to monopolize the
relevant markets in violation of § 2 of the Sherman Act, 15
U.S.C. § 2.

   More specifically, the plaintiffs assert that J&J impermiss-
ibly leveraged its monopoly power in sutures to create a
monopoly in the endos market. They contest J&J’s “market
share purchase requirements,” under which J&J enters into
contractual arrangements that condition discounts and rebates
on a buyer purchasing the bulk of its products from the com-
pany. This scheme, plaintiffs suggest, was coercive and
resulted in artificially inflated prices. Plaintiffs also object to
the bundled discounts offered to hospitals that purchase both
sutures and endos from J&J. They allege that these bundled
discounts are exclusionary because of J&J’s dominance in the
sutures market.

II.   Bamberg’s Contracts with J&J and the Distributor

   Bamberg is a member of “Premier,” a GPO which negoti-
ated agreements with J&J on Bamberg’s behalf. Those agree-
ments set the pricing options for sutures and endo products.
Bamberg then executed its own contracts with J&J pursuant
to the terms of the Premier agreements. Those contracts noted
that Bamberg would order products either directly from J&J
or from an authorized distributor of J&J’s products. Bamberg
4668        DELAWARE VALLEY v. JOHNSON & JOHNSON
chose the latter option and selected as its distributor Owens &
Minor (“O&M”). Bamberg entered into a separate contract
with O&M, which specified the terms of purchase for J&J
products. Accordingly, Bamberg’s contract with J&J did not
result in the procurement of any goods directly from J&J.
Bamberg did not pay J&J directly for any goods, and J&J did
not ship any goods directly to Bamberg.

   The distributor, O&M, is not owned or otherwise controlled
by J&J. O&M’s distributorship agreement with J&J specified
that if products were sold to a J&J contract customer, the dis-
tributor would pay the manufacturer the set price that was
negotiated between J&J and the GPO. In turn, Bamberg’s
contract with O&M permitted the distributor to charge a
markup percentage. Accordingly, the final contract price paid
by Bamberg was equal to the price negotiated under the Pre-
mier agreement with J&J, plus O&M’s markup. Indisputably,
Bamberg paid O&M directly for its orders, and O&M deliv-
ered the products to Bamberg.

III.   Proceedings Below

   After this contractual scheme was laid out before the dis-
trict court, DVSS moved for partial summary judgment. It
argued that Bamberg did not have standing to seek damages
because it was not a “direct purchaser” of J&J’s products, as
required by Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).
J&J and Bamberg moved for a determination that Bamberg
does have standing as a “direct purchaser” because the com-
plaint challenges the legality of Bamberg’s own contracts
with J&J.

   The district court entered an order denying the motions
filed by J&J and Bamberg, and granting DVSS’s motion for
partial summary judgment. The court held that Bamberg is not
a “direct purchaser” from J&J because it bought its products
from an independent distributor, and therefore the hospital
lacks standing to sue for antitrust damages. In the district
           DELAWARE VALLEY v. JOHNSON & JOHNSON            4669
court’s view, Bamberg’s independent contract with J&J did
“not change the fact that O&M is the direct purchaser here.”
In re Endosurgical Products Direct Purchasher Antitrust
Litig., No. CV-05-8809-JVS (C.D. Cal. Aug. 2, 2007). This
interlocutory appeal followed.

                       JURISDICTION

   The federal courts have jurisdiction to consider questions
alleging the violation of federal laws pursuant to 28 U.S.C.
§ 1331. We have jurisdiction over this interlocutory appeal
pursuant to 28 U.S.C. § 1292(b).

                  STANDARD OF REVIEW

   “Standing is a question of law reviewed de novo.” Stewart
v. Thorpe Holding Co. Profit Sharing Plan, 207 F.3d 1143,
1148 (9th Cir. 2000). We also review de novo a district
court’s decision to grant summary judgment. Id. We must
determine, viewing the evidence in the light most favorable to
the nonmoving party, whether there are any genuine issues of
material fact and whether the district court correctly applied
the relevant substantive law. Lopez v. Smith, 203 F.3d 1122,
1131 (9th Cir. 2000) (en banc).

                        DISCUSSION

I.   The Direct Purchaser Rule

   [1] Section 4 of the Clayton Act broadly authorizes that
“any person who shall be injured” by a violation of the anti-
trust laws may seek treble damages from the offending party.
15 U.S.C. § 15(a). The Supreme Court has interpreted that
section narrowly, thereby constraining the class of parties that
have statutory standing to recover damages through antitrust
suits. See Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977);
Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S.
481 (1968). In particular, the Supreme Court has given con-
4670        DELAWARE VALLEY v. JOHNSON & JOHNSON
siderable attention to the question of who may assert a claim
when a middleman, for example a distributor or a wholesaler,
sits between an end user and a manufacturer.

   [2] The first major case to consider the scope of § 4 was
Hanover Shoe, 392 U.S. 481. There, Hanover alleged that
United had monopolized the shoe manufacturing industry in
violation of § 2 of the Sherman Act. Id. at 483. The plaintiff
sought treble damages for overcharges paid in leasing certain
machinery from United. Id. at 483-84. United defended itself
using a “passing-on” theory, arguing that Hanover had passed
on the overcharge to its customers and therefore had suffered
no injury. Id. at 487-88. The Court rejected the pass-on
defense for two reasons. First, it reasoned that establishing the
amount of overcharge shifted to indirect purchasers “would
normally prove insurmountable.” Id. at 493. Second, it con-
cluded that a pass-on defense would reduce the overall effec-
tiveness of antitrust actions by diminishing the recovery
available to any potential plaintiff. Id. at 494. Accordingly,
the Court held that a party could not defend an antitrust suit
brought by a middleman by showing that the actual injury
caused by the overcharge was suffered by the end user. Id.

   In Illinois Brick, the Supreme Court extended the Hanover
principle to foreclose the offensive use of a pass-on theory.
431 U.S. at 728 (holding that indirect purchasers may not
recover in an antitrust suit by proving that an overcharge was
passed on to them through the distribution chain). There, the
State of Illinois sued concrete block manufacturers for con-
spiring to raise prices in violation of § 1 of the Sherman Act.
Id. at 726 27. The companies had sold blocks to contractors
who acted as the middlemen before selling to the State. Id. at
726. The Court reasoned that the rule forbidding the use of a
pass-on theory enunciated in Hanover Shoe should “apply
equally to plaintiffs and defendants.” Id. at 728. “[A]llowing
offensive but not defensive use of pass-on would create a seri-
ous risk of multiple liability for defendants.” Id. at 730.
Accordingly, the State was foreclosed from asserting a suit
            DELAWARE VALLEY v. JOHNSON & JOHNSON            4671
under § 4 of the Clayton Act because it did not buy concrete
directly from the defendant manufacturers. Id. at 728-29.

   [3] The Supreme Court further reasoned that the direct pur-
chaser rule serves to eliminate the “evidentiary complexities
and uncertainties” of apportioning overcharges between direct
and indirect purchasers. Id. at 731-33, 740-43. “[A]ntitrust
laws will be more effectively enforced by concentrating the
full recovery for the overcharge in the direct purchasers rather
than by allowing every plaintiff potentially affected by the
overcharge to sue . . . .” Id. at 735. The Court explicitly
rejected the State’s attempt “to carve out exceptions to the
Hanover Shoe rule for particular types of markets.” Id. at 744.
In sum, a bright line rule emerged from Illinois Brick: only
direct purchasers have standing under § 4 of the Clayton Act
to seek damages for antitrust violations. See id. at 735.

   The Supreme Court reaffirmed the reasoning of Illinois
Brick in Kansas v. UtiliCorp United Inc., 497 U.S. 199
(1990). There, the States of Kansas and Missouri, on behalf
of individual energy consumers, initiated suits against a pipe-
line company and five gas production companies, alleging
that the defendants conspired to inflate the price of gas. Id. at
204. The Court determined that the States lacked standing
because the consumers they represented were indirect pur-
chasers. Id. at 207 (“In the distribution chain, they are not the
immediate buyers from the alleged antitrust violators.”). The
consumers bought gas directly from the utilities, so “any anti-
trust claim against the defendants is . . . for the utilities to
assert.” Id.

   The Court refused to create an exception to the Illinois
Brick rule, even where its previous concerns “about the diffi-
culties of apportionment, the risk of multiple recovery, and
the diminution of incentives for private antitrust enforcement”
would “not apply with equal force.” Id. at 208. The Court
rejected the States’ argument that the rule should not apply
because it would be relatively easy to apportion the over-
4672        DELAWARE VALLEY v. JOHNSON & JOHNSON
charge among the purchasers. Id. at 208-10. In order to avoid
extensive fact-based litigation in antitrust suits to establish
standing, the Court specifically noted its desire for a bright-
line rule. Id. at 211 (“The difficulties posed by issues of
[apportionment] led us to adopt the direct purchaser rule, and
we must decline to create an exception that would require
their litigation.”). The Court noted that the Illinois Brick rule
“often den[ies] relief to consumers who have paid inflated
prices because of their status as indirect purchasers,” id. at
211-12, yet refused to broaden the scope of relief in order to
maintain stability in the law, id. at 216. The Court concluded,

    The rationales underlying Hanover Shoe and Illinois
    Brick will not apply in equal force in all cases. We
    nonetheless believe that ample justification exists for
    our stated decision not to ‘carve out exceptions to
    the [direct purchaser] rule for particular types of
    markets.’ The possibility of allowing an exception,
    even in rather meritorious circumstances, would
    undermine the rule.

    ...

    In sum, even assuming that any economic assump-
    tions underlying the Illinois Brick rule might be dis-
    proved in a specific case, we think it an unwarranted
    and counterproductive exercise to litigate a series of
    exceptions. Having stated the rule in Hanover Shoe,
    and adhered to it in Illinois Brick, we stand by our
    interpretation of § 4.

Id. at 216-17 (internal citation omitted).

   In Royal Printing Co. v. Kimberly-Clark Corp., 621 F.2d
323 (9th Cir. 1980), this circuit applied the direct purchaser
rule. A printing company and other small businesses brought
suit against ten manufacturers of paper products. Id. at 324.
The plaintiffs had never bought paper products directly from
                 DELAWARE VALLEY v. JOHNSON & JOHNSON      4673
any of the defendants, but instead purchased through whole-
saling firms. Id. This court permitted the suit to proceed inso-
far as plaintiffs could demonstrate that the wholesaler was a
subsidiary of a defendant. Id. at 326. However, those plain-
tiffs who bought through independent wholesalers that were
not owned or controlled by any defendant were only indirect
purchasers. Id. at 327-28. Therefore, the Illinois Brick rule
barred them from sustaining a suit under § 4 of the Clayton
Act. Id.

   We recently reaffirmed the direct purchaser rule in Kendall
v. Visa U.S.A., Inc., 518 F.3d 1042, 1049-50 (9th Cir. 2008).
There, merchants brought an antitrust action against both
credit card companies and banks, alleging that the defendants
conspired to set fees on credit card purchases. Id. at 1044-45.
We found that, because the fee at issue was set by the credit
card companies and not by the banks, the banks were the
“middlemen.” Id. at 1048-49. As a result, plaintiffs could not
maintain an antitrust suit against the credit card companies as
direct purchasers because they ran “squarely into the Illinois
Brick wall.” Id. at 1049. The plaintiffs could not get around
the direct purchaser rule because they failed to allege any
facts showing that the banks were either controlled by or in
a conspiracy with the credit card companies. Id. at 1050.

II.        Bamberg Is Not a Direct Purchaser

      A.     Precedent Controls the Outcome

   [4] Quite simply, we are bound by the sensible and straight-
forward rule set forth by Illinois Brick. Appellants argue this
situation is distinguishable because Bamberg and J&J did
have an independent contractual relationship. However,
Supreme Court jurisprudence has been neither vague nor
ambiguous in establishing the direct purchaser rule. The
Supreme Court intended to make a bright line rule for identi-
fying the proper plaintiff when an antitrust violation occurs in
a multi-tiered distribution system. See Illinois Brick, 431 U.S.
4674       DELAWARE VALLEY v. JOHNSON & JOHNSON
at 735-36. The Court has explicitly rejected attempts to create
exceptions to that rule, even when the considerations in a par-
ticular market may undermine some of the reasoning used by
the Illinois Brick Court. See UtiliCorp, 497 U.S. at 211. The
undisputed truth is that Bamberg only indirectly purchased
goods from J&J.

   [5] Under the direct purchaser rule, Bamberg lacks standing
under § 4 of the Clayton Act to assert an antitrust violation
against J&J. It is undisputed that O&M, as the distributor, was
the immediate purchaser of sutures and endo products from
J&J. O&M paid J&J directly for its inventory and took title
in the products before selling them to Bamberg. Bamberg
directly paid O&M, not J&J, for its orders. O&M is not an
agent or subsidiary of J&J, but rather an independently owned
and managed company. Following the clear rule set forth in
Illinois Brick, Bamberg lacks standing because the hospital is
not a direct purchaser of products from J&J. Although the
price that Bamberg pays O&M is set, in part, by an agreement
negotiated by a GPO on behalf of Bamberg, the hospital con-
tracted separately with O&M for the actual sale and delivery
of products. The final price paid by Bamberg included the list
price negotiated by Premier, plus a markup fee charged by
O&M.

   [6] The presence of a contractual relationship between
Bamberg and J&J does not change the fact that Bamberg also
had a contract with O&M, and it was that contract that ulti-
mately effectuated the transfer of these goods. Furthermore,
the plaintiffs are not merely seeking to invalidate an individ-
ual contract between a GPO and J&J; rather they are attacking
the pricing scheme employed by J&J in its negotiations with
a wide range of health care providers. Appellants’ contention
that we should myopically focus on the contract between
Bamberg and J&J, without taking into consideration where
the hospital actually bought its products, is therefore unavail-
ing.
              DELAWARE VALLEY v. JOHNSON & JOHNSON                    4675
  B.    We Decline To Adopt Appellants’ Reformulation of the
        Direct Purchaser Rule

   Appellants do not contend that Bamberg qualifies for any
previously-recognized exception to the direct purchaser rule.1
Rather, they urge this court to adopt a new rule that they
believe is better attuned to the business relationships between
health care providers and manufacturers. They contend that
this case presents a common arrangement whereby a GPO
negotiates prices with manufacturers on behalf of hospitals,
but then individual hospitals place orders through independent
distributors. Appellants assert that the hospital, not the distrib-
utor, is the direct victim of the alleged antitrust violation.
Under their reasoning, the hospital is therefore the proper
plaintiff to enforce the antitrust laws because any injury to the
distributor was, at most, derivative. Bamberg and J&J propose
that a party should be deemed a “direct purchaser” when (1)
the plaintiff contracted directly with the defendant, (2) its
complaint challenges the lawfulness of that contract and (3)
the alleged injury is that the defendant charged artificially
high prices in its contract with plaintiff. Under this new for-
mulation of the Illinois Brick rule, Bamberg would have
standing to bring suit against J&J, despite the fact that it actu-
ally bought its products from O&M. Bamberg did have a con-
tract with J&J and the hospital contests the validity of the
price set in that contract.

   Appellants fail to persuade this court that there is anything
extraordinary about the facts of this case warranting a devia-
tion from the firmly established Illinois Brick rule. Appellants
  1
    The case law recognizes standing for an indirect purchaser if (1) there
was a pre-existing cost-plus contract, see UtiliCorp, 497 U.S. at 217-18,
or (2) the direct purchaser is owned or controlled by the indirect pur-
chaser, Royal Printing Co., 621 F.2d at 326. Additionally, this court has
held that an indirect purchaser may bring suit where he establishes a price-
fixing conspiracy between the manufacturer and the middleman. See Ari-
zona v. Shamrock Foods Co., 729 F.2d 1208, 1211 (9th Cir. 1984). Appel-
lants here have made no such allegation.
4676        DELAWARE VALLEY v. JOHNSON & JOHNSON
urge that we look to the substance of a plaintiff’s antitrust the-
ory, and not just the formalities of the purchase transaction to
determine if there is standing. The allegedly predatory behav-
ior here occurred in the manufacturer’s dealings with the
GPOs, who were representing the hospitals’ interests. Appel-
lants may well be correct in positing that a hospital has a
greater incentive than a distributor to bring an antitrust claim
when the conduct complained of involves price negotiations
with a GPO. The distributor is not a party to the initial negoti-
ations that set the list price for its products. Such a distributor
arguably has a smaller stake in contesting the price than a
hospital whose representative was part of those negotiations
and felt that the manufacturer was engaging in illegal behav-
ior.

   [7] However, the Supreme Court has already rejected a
similar argument. See UtiliCorp, 497 U.S. at 218. There, even
though the middleman passed on 100 percent of the over-
charge to consumers, the Supreme Court still held that the
consumer was not a direct purchaser and only the middleman
could bring an antitrust suit. Id. at 208-12, 218. In so doing,
the Court closed the door on the theory that an end user who
buys from an independent distributor rather than the manufac-
turer, should have standing because it may be the most effi-
cient enforcer of antitrust laws. The Court ensured that the
rule of Illinois Brick was straightforward so that it could be
administered with “simplicity and certainty.” Id. at 218. Illi-
nois Brick is not a policy holding, but rather a case of statu-
tory construction. See California v. ARC America Corp., 490
U.S. 93, 102-03 (1989) (“As we made clear in Illinois Brick,
the issue before the Court in both that case and in Hanover
Shoe was strictly a question of statutory interpretation —
what was the proper construction of § 4 of the Clayton Act.”).
The Court’s firm rule does not provide us the leeway to make
a policy determination on a case-by-case basis as to whether
standing should be recognized when there are special business
arrangements. See Illinois Brick, 431 U.S. at 744 (“We reject
these attempts to carve out exceptions to the Hanover Shoe
            DELAWARE VALLEY v. JOHNSON & JOHNSON              4677
rule for particular types of markets.”). Accordingly, appel-
lants’ policy arguments are unavailing.

   Even if we opted to strike out on a new path, we are not
convinced that appellants’ rule would be a better mechanism
for enforcing antitrust violations. Adopting their formulation
of the direct purchaser rule would still present problems of
multiple liability and force courts to engage in complex fac-
tual inquiries to determine how damages should be appor-
tioned between parties. For instance, under their rule, both
O&M and Bamberg could theoretically bring a claim against
J&J for the same overcharge. This would subject J&J to the
possibility of multiple liability and would require the courts
to disentangle the proper recovery for each party in the distri-
bution chain. These are precisely the concerns that troubled
the Supreme Court in Illinois Brick.

   [8] Moreover, the distributor is not a completely irrelevant
economic actor in this contractual framework. In theory, a
demand curve exists for the bundle of goods and services that
O&M sells. If the price of the goods is artificially inflated by
the anti-competitive practices of J&J, that will affect the
attractiveness of the distributor’s products in the marketplace.
There is no reason to believe that market forces do not work
on O&M and other distributors. The presence of another dis-
tributor as a plaintiff in this case, DVSS, shows that distribu-
tors are indeed affected by J&J’s allegedly predatory pricing
scheme and do have incentives to bring suit against the manu-
facturer. This directly undermines Bamberg’s argument that
hospitals should always have standing because distributors
will not be efficient enforcers of antitrust law. There are
clearly other motivated plaintiffs, distributors and hospitals
alike, who unquestionably meet the direct purchaser require-
ment and can serve the role of private attorney general con-
templated by § 4 of the Clayton Act. The direct purchaser rule
is a clearly established tenet of antitrust law and this case falls
within its mandate.
4678        DELAWARE VALLEY v. JOHNSON & JOHNSON
  C.   In re Lorazepam Does Not Dictate a Different Result

   Appellants also attempt to find support for their position
from a recent decision from the United States District Court
for the District of Columbia. See In re Lorazepam & Cloraze-
pate Antitrust Litig., 202 F.R.D. 12, 20 (D.D.C. 2001). The
plaintiffs there included an individual hospital, a GPO, and a
health maintenance organization that operated hospitals. Id. at
14-15. The plaintiffs sought class certification as “direct pur-
chasers” of drugs from pharmaceutical manufacturers who
allegedly engaged in price-fixing. Id. at 22. The defendants
moved to dismiss on the grounds that the plaintiffs had “nei-
ther adequately defined the term ‘direct purchaser’ nor suffi-
ciently explained how they and other putative class members
‘directly’ purchased the drugs from [the defendant].” Id. The
defendants contended that “direct purchasers are unascertain-
able” in the pharmaceuticals market. Id.

   The district court disagreed, concluding that the plaintiffs
had made a “sufficient showing of standing” to warrant class
certification. Id. at 23. The district court noted, however, that
plaintiffs “are members of the direct purchaser class ‘to the
extent that they purchased directly from [the defendant] for
their own account.’ ” Id. Those purchasers were billed
directly by the defendant, and paid the defendant directly for
their products. Id. The district court noted that “discerning
direct purchasers vis-à-vis indirect purchasers in the pharma-
ceuticals industry is complex.” Id. But, the district court opted
to approve class certification because it was wary that the
complicated nature of this market would result in the “sense-
less point that no one may be sued for antitrust injury in the
pharmaceuticals industry because it is too difficult to weed
out the indirect purchasers.” Id.

   Furthermore, the Lorazepam court explicitly rejected the
defendants’ argument that the district court should adopt a
rule that would better serve the business interests at issue in
that case. Id. at 19-20. The district court noted that “any
            DELAWARE VALLEY v. JOHNSON & JOHNSON              4679
exception to the Illinois Brick direct purchaser rule must be
narrowly restricted to a situation in which complex market
forces are stripped of their effect due to preexisting condi-
tions, such as with a cost-plus contract, so that the pass-on is
clearly discernable.” Id. at 19-20. The court refused to enter-
tain policy arguments advocating for a new exception. Id. at
20. Similarly, we reject appellants’ attempt to craft a new rule
that they suggest would be better suited to enforce antitrust
laws in the modern healthcare industry.

   Lorazepam simply does not buttress appellants’ position —
in fact, it undermines many of their arguments. Unlike this
case, the Lorazepam suit was a class action. The district court
certified the class of “putative direct purchasers” to allow the
suit to go forward, but the court was careful to note that a
direct purchaser was a plaintiff who “purchased directly
from” the manufacturer. Id. at 23. Bamberg did not purchase
its products directly from J&J. Rather, it was invoiced by, and
sent payments directly to, O&M. In Lorazepam, the district
court’s willingness to grant class certification so that litigation
could proceed does not support a finding that this court should
relax the direct purchaser rule when we have parties before us
that clearly do satisfy the direct purchaser standard. The
Lorazepam court itself never stated that a party who was
shown not to be a direct purchaser could ultimately seek
recovery. Instead, by saying that a party was a member of the
class “to the extent” they were direct purchasers, the Loraze-
pam court endorsed the Illinois Brick rule. See id.

                         CONCLUSION

   For the foregoing reasons, we affirm the order of the dis-
trict court, holding that Bamberg lacks standing to seek dam-
ages for an alleged antitrust violation.

  AFFIRMED.