Larkin Community Hospital v. Intuitive Surgical Inc.

Filing 69

Order by Judge Vince Chhabria denying 58 Motion to Dismiss. (vclc3, COURT STAFF) (Filed on 1/3/2022)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA

LARKIN COMMUNITY HOSPITAL, et
al.,
Plaintiffs,
v.

Case No. 21-cv-03825-VC
ORDER DENYING MOTION TO
DISMISS
Re: Dkt. No. 58

INTUITIVE SURGICAL INC.,
Defendant.

The plaintiffs in this case, a group of hospitals, allege that Intuitive Surgical has violated
the antitrust laws by preventing its customers from turning to third parties when their surgical
robots or robot instruments stop working. This is not the first time this Court has been presented
with these allegations: a potential competitor to Intuitive Surgical raised a subset of these issues
in a related lawsuit, all of which survived a motion to dismiss. See Surgical Instrument Service
Company, Inc. v. Intuitive Surgical, Inc., 2021 WL 5474898 (N.D. Cal. Nov. 23, 2021).1
Intuitive Surgical’s motion to dismiss this lawsuit is denied for the same reasons.
1. As Intuitive Surgical acknowledged in its reply brief, the bulk of the arguments
advanced in its motion to dismiss were rejected by this Court in Surgical Instrument Service.
First, the plaintiffs have “plausibly alleged the existence of distinct product markets”—both with
respect to the instrument aftermarket and the robot aftermarket—“by virtue of the alleged

The Court granted Intuitive Surgical’s motion to dismiss a Lanham Act claim that is not an
issue in this case. See id. at *6–7.
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consumer demand.” Id. at *4. Second, to the extent that Intuitive Surgical requests dismissal of
the allegations concerning the use counters in EndoWrist instruments, the EndoWrist instrument
redesign, or Intuitive Surgical’s decision to deny its customers access to its software, that request
is denied: “a court dismisses claims, not allegations.” Id. at *5. See also In re Dealer
Management Systems Antitrust Litigation, 313 F. Supp. 3d 931, 956 (N.D. Ill. 2018) (“[A]t [the
motion to dismiss] stage, the Court’s only role is to determine whether the Complaint states a
claim for the causes of actions it advances.”). The fact that some of the plaintiffs’ allegations
may not contribute to an antitrust violation does not doom an otherwise sufficiently pled claim.
2. The plaintiffs also raise allegations beyond those of Surgical Instrument Service,
alleging that Intuitive Surgical has unlawfully stifled competition in the “Da Vinci Service
Aftermarket”—the market for repairs of the robots themselves. Intuitive Surgical argues that the
plaintiffs’ gripe is really with Intuitive Surgical’s refusal to share its software with its customers.
Without this software, third parties cannot fix every malfunction that may come up. And because
the plaintiffs have not challenged this refusal to deal (expressly disclaiming any intent to do so in
their briefing), Intuitive Surgical contends that the plaintiffs have not suffered antitrust injury, as
any harm that they face is a consequence of this refusal—not the challenged conduct. See
American Ad Management, Inc. v. General Telephone Co., 190 F.3d 1051, 1056 (9th Cir. 1999)
(“An antitrust injury must ‘flow[] from that which makes defendants’ acts unlawful.’”) (quoting
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977)).
But the complaint plainly alleges that at least some of the plaintiffs’ repair needs could be
addressed by third parties, but for Intuitive Surgical’s allegedly anticompetitive conduct. For
example, the complaint describes an incident in which Hillcrest Hospital hired a third-party
servicer to install a new power supply for the robot’s touchscreen monitor. The plaintiffs allege
that “the robot was fully functioning” after the repair. The plaintiffs have therefore sufficiently
alleged that their injuries flow from the challenged conduct.
***
The motion to dismiss is denied in its entirety. Intuitive Surgical’s answer is due within

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14 days of this order.

IT IS SO ORDERED.
Dated: January 3, 2022
______________________________________
VINCE CHHABRIA
United States District Judge

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