Summary
The Ninth Circuit affirmed the denial of LegitScript LLC’s motion for summary judgment in PharmacyChecker.com LLC’s antitrust action. The court held that, under Supreme Court and Ninth Circuit precedent, alleged unlawful conduct by a plaintiff or facilitation of unlawful activity by others does not necessarily preclude antitrust standing for injuries to a business competing in a legitimate market.
Topics
Practice areas
Questions Presented
- Whether a plaintiff has antitrust standing under Section 4 of the Clayton Act to seek recovery for injury to a business or property interest allegedly obtained or supported through unlawful conduct.
- Whether evidence that PharmacyChecker facilitated possibly unlawful importation of foreign drugs by some customers was sufficient to defeat antitrust standing at the summary-judgment stage.
- Whether the Ninth Circuit's precedents permit antitrust standing where the plaintiff competes in a legitimate market even though some of the business or property interest allegedly injured was attained through unlawful means.
Holdings
- A plaintiff may have antitrust standing under Section 4 of the Clayton Act to sue for injury to its business or property interest while competing in a legitimate market, even if that interest was attained through unlawful means.
- PharmacyChecker was not denied antitrust standing merely because the evidence suggested that it facilitated possibly unlawful importation of foreign drugs by some customers.
- Memorex's reasoning is not limited to situations in which the plaintiff's illegal conduct was directed against the defendant; alleged wrongdoing against third parties does not, by itself, bar the private antitrust action.
- The court did not adopt a categorical rule that an entirely or almost entirely illegal business can never have antitrust standing; it held that the authorities cited by LegitScript were factually and legally inapplicable to PharmacyChecker.
- Modesto does not control because it involved an injury fully accounted for by the plaintiff's lack of governmental approval; here, LegitScript did not identify a separate legal or governmental force that fully accounted for PharmacyChecker's alleged injury.
Key quotations
“a plaintiff may have antitrust standing under Section 4 of the Clayton Act to sue for injuries suffered by its business or property interest when competing in a legitimate market, even if such business or property interest has been attained by unlawful means.” (at 1034)
“As such, Memorex confirmed that, under Section 4 of the Clayton Act, a plaintiff can suffer a legally cognizable injury when competing in a legitimate market, even if the injury is inflicted upon a business or property interest that has been obtained through the plaintiff’s unlawful conduct.” (at 1048)
“Based on this record, the teachings of the Supreme Court, and the binding precedents in our Circuit, we hold that PharmacyChecker is not denied antitrust standing under Section 4 of the Clayton Act simply because evidence suggests PharmacyChecker facilitated possibly unlawful importation of foreign drugs by some number of its customers.” (at 1049)
Factual background
PharmacyChecker operates a website that accredits online pharmacies and compares drug prices; it does not itself buy, sell, distribute, dispense, or process drug orders. Much of its revenue came from verification and click-through fees associated with foreign online pharmacies, and some United States users allegedly purchased and imported prescription drugs through links on the website. PharmacyChecker alleged that competitor LegitScript participated in a group boycott that impaired PharmacyChecker's ability to compete in online-pharmacy accreditation and comparative drug-price information markets.
Procedural history
PharmacyChecker sued LegitScript in the District of Oregon for allegedly participating in a group boycott violating the antitrust laws. The district court denied LegitScript's motion for summary judgment, concluding that the evidence did not establish that PharmacyChecker lacked antitrust standing, and certified two questions for interlocutory appeal under 28 U.S.C. § 1292(b). The Ninth Circuit accepted the appeal, declined to revisit the district court's unchallenged rejection of issue preclusion, and affirmed the denial of summary judgment on antitrust-standing grounds.