Suture Express, Inc. v. Cardinal Health, Inc. et al

Filing 50

MEMORANDUM AND ORDER The court shall grant in part and deny in part defendants' motions to dismiss (doc 23, 27). The motions are granted as to counts 2, 3, 4, and 7 and denied as to counts 1, 5 and 6. Document # 23 is moot as to Cardinal Health Inc. The motion to dismiss filed as Doc # 25 is entirely moot. Plantiff shall be granted leave to file a second amended complaint by August 30, 2013. The motion to amend the memorandum in support of the motion to dismiss filed by defendant Owen and Minor Distribution, Inc (Doc 45) is granted, The request for judicial notice (# 29)shall be granted. The motion for oral argument (48) is denied. Signed by District Judge Richard D. Rogers on 8/1/2013. (meh)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
SUTURE EXPRESS, INC.,
Plaintiff,
v.
CARDINAL HEALTH 200, LLC, and
OWENS & MINOR DISTRIBUTION, INC.,
Defendants.

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Case No. 12-2760-RDR

MEMORANDUM AND ORDER
This is an antitrust action raising federal and state law
claims.
for

This case is before the court upon the motions to dismiss

failure

to

state

a

claim

(Doc.

Nos.

23

and

27)

filed

by

defendant Owens & Minor Distribution, Inc. and defendant Cardinal
Health 200, LLC.1
plausible

Thus, the question for the court is whether

antitrust

law

violations

and

state

described in plaintiff’s first amended complaint.
that:

law

claims

are

The court finds

the first amended complaint does not allege per se antitrust

violations

or

monopolization

violations;

plaintiff’s

claims

of

conspiratorial agreement are not specifically supported by factual
allegations;

and

plaintiff’s

unjust

enrichment

claim

does

not

properly allege a benefit conferred by plaintiff upon defendant.
The court further finds that plaintiff’s claims that defendants,

1

Two other defendants named in the first amended complaint, Cardinal Health,
Inc. and Owens & Minor, Inc. have been voluntarily dismissed without prejudice.
Doc. No. 42. This action makes moot a portion of the motion to dismiss filed as
Doc. No. 23 and makes the motion to dismiss filed as Doc. No. 25 entirely moot.

acting individually, violated § 1 of the Sherman Act and § 3 of the
Clayton Act are plausible under rule of reason analysis and that
analogous claims under K.S.A. 50-112 should also survive.2
I.

PLAINTIFF’S FIRST AMENDED COMPLAINT (Doc. No. 19).
Plaintiff alleges federal and state antitrust law violations

and makes a claim of unjust enrichment relating to the distribution
and sale of “med-surg” supplies to acute care providers.

“Med-

surg” supplies are medical and surgical single-use items such as
sutures,

needles,

catheters.

syringes,

gloves,

surgical

and

There are thirty product categories in the “med-surg

basket” commonly sold to acute care providers.
that

instruments

defendants

Owens

&

Minor

Distribution,

Plaintiff alleges
Inc.

(“O&M”)

and

Cardinal Health 200, LLC (“Cardinal”) are broad-based distributors
who purchase and distribute the full gamut of products in the medsurg basket.

The complaint alleges that there are approximately

4,800 acute care providers that commonly purchase med-surg supplies
through

group

purchasing

organizations,

regional

cooperatives or other multi-hospital systems.
alleged to have 39% of this market.

purchasing

Defendant O&M is

Defendant Cardinal is alleged

to have 33% of this market.

2

The court shall also rule as follows upon motions connected to the motions to
dismiss. The unopposed motion to amend the memorandum in support of the motion
to dismiss filed by defendant Owen & Minor Distribution, Inc. (Doc. No. 45) and
that defendant’s request for judicial notice (Doc. No. 29) shall be granted. The
motion for oral argument filed by defendants Cardinal Health 200, LLC and Owens &
Minor Distribution, Inc. (Doc. No. 48), which is also unopposed, shall be denied.

2

Plaintiff has limited its business to a portion of the medsurg

basket

-

endomechanical
devices

used

surgery.

the

sale

products.
in

and

distribution

Endomechanical

minimally

invasive

of

sutures
products

(“endo”)

surgeries,

and
are

like

laparoscopic

Sutures and endo products are alleged to make up 10% of

med-surg supplies distributed in the United States to acute care
providers.

Plaintiff asserts that it provides a greater variety of

suture and endo products than the more broad-based distributors who
concentrate

on

popular

widely-used

or

so-called

“core”

products,

sutures

and

endo

which

are

products.

the

most

Plaintiff

alleges that it is the only significant distributor of specialty or
non-core sutures and endo products.

For this and other reasons,

plaintiff contends that its business thrived from the beginning in
1998

through

2008.

Plaintiff

alleges

that

it

distributes

to

approximately 900 of the nation’s 4,800 acute care providers and
that it offers both core and non-core sutures and endo products.
Plaintiff states that in 2008 defendants attempted to leverage
their

power

in

the

distribution

of

a

fuller

array

of

med-surg

products to coerce customers from buying plaintiff’s sutures and
endo products.

Plaintiff asserts that contracts were constructed

which unlawfully tied the sale of sutures and endo products to the
sale

of

other

products

in

the

med-surg

basket.

Under

these

contracts if an acute care provider did not purchase 90% or more of
its sutures and endo products from a defendant, then it would pay a
3

penalty

on

the

effectively
plaintiff,
providers

med-surg

The

defendant.

entire
penalty

was

prevented
thus

to

allegedly

acute

care

foreclosing

enjoy

basket
so

from

opportunity

alleged

from

substantial

providers

the

plaintiff’s

purchased

that

that

it

dealing

with

acute

care

service,

lower

for

superior

distribution fees and comprehensive product selection.

According

to

“discount

plaintiff,

program”

where

this

penalty

providers

was

were

also
not

packaged

eligible

as

a

for

a

discounted

distribution fee if they did not purchase their sutures and endo
products from a defendant.
amount

of

the

“discount”

defendants’

sutures

constituted

predatory

power,

raised

and

Plaintiff further contends that the
was

endo

pricing

barriers

to

such

as

to

products
which

entry

bring

below

enhanced
and

the

cost

price

and,

defendants’

impeded

the

of

thus,
market

ability

of

plaintiff to compete.
Plaintiff asserts that defendants’ exclusionary practices are
strikingly similar and that the “lock-step implementation of nearly
identical

penalty

interests.”

programs

defies

each

[defendant’s]

economic

Doc. No. 19, ¶ 52.

Plaintiff contends that in order to avoid paying extra for the
med-surg products hospitals needed as part of the med-surg basket,
acute care providers declined to purchase sutures and endo products
from

plaintiff

Plaintiff

alleges

and

instead

that

its

purchased

business
4

has

them

from

defendants.

been

injured

and

that

consumers have been injured in the following manner:

less consumer

choice

distributors;

among

competing

suture

and

endo

product

increased costs and reduced service; reduced access and barriers to
entry to the sutures and endo products distribution market; chilled
innovation within the med-surg supplies distribution market; and
loss of competition among distributors to the acute care market.
Seven counts are listed in the complaint:

a violation of § 1

of the Sherman Act alleging illegal tying (Count 1); a violation of
§

2

of

the

attempted

Sherman

Act

monopolization

alleging
of

the

unlawful
markets

monopolization
for

the

or

domestic

distribution of sutures and endo products to acute care providers
(Count

2);

a

violation

of

§

1

of

the

Sherman

Act

alleging

conspiracy to restrain trade (Count 3); a violation of § 2 of the
Sherman

Act

alleging

conspiracy

to

monopolize

(Count

4);

a

violation of § 3 of the Clayton Act alleging exclusive dealing
(Count 5); a violation of K.S.A. 50-101 et. seq. alleging anticompetitive tying and bundling (Count 6); and unjust enrichment
(Count 7).
II.

STANDARDS GOVERNING DEFENDANTS’ MOTIONS TO DISMISS
FED.R.CIV.P. 8(a) requires that a complaint contain a “short

and

plain

statement

entitled to relief.”

of

the

claim

showing

that

the

pleader

is

The Supreme Court has stated that a complaint

must provide a defendant with “fair notice” of the claims against
it and the grounds for relief. See Bell Atlantic Corp. v. Twombly,
5

550 U.S. 544, 555 (2007).

Pursuant to FED.R.CIV.P. 12(b)(6), a

court may dismiss a complaint when it does not contain enough facts
to state a claim to relief that is plausible on its face.
570.

Id. at

“A claim has facial plausibility when the plaintiff pleads

factual

content

that

allows

the

court

to

draw

the

reasonable

inference that the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “The plausibility
standard is not akin to a ‘probability requirement,’ but it asks
for

more

than

unlawfully.”

a

sheer

possibility

that

a

defendant

Id. (quoting Twombly, 550 U.S. at 556).

has

acted

“While a

complaint attacked by a Rule 12(b)(6) motion to dismiss does not
need

detailed

factual

allegations,

a

plaintiff's

obligation

to

provide the grounds of his entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements
of a cause of action will not do. Factual allegations must be
enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555 (internal citations and parentheticals
omitted).

The

Court

observed

in

Twombly

antitrust discovery can be expensive.”

upon

some

specificity

in

“proceeding

to

Id. at 558 (applying the

pleading standard to Sherman Act claims).
“’insist

that,

Thus, a court should

pleading

before

potentially massive factual controversy to proceed.’”

allowing

a

Id. (quoting

Associated Gen. Contractors of Cal., Inc. v. Carpenters, 459 U.S.
519, 528 n.17 (1983)).
6

In considering a motion to dismiss, a court must accept all of
the plaintiff's allegations as true and construe them in the light
most favorable to the plaintiff.

Smith v. United States, 561 F.3d

1090, 1098 (10th Cir. 2009) cert. denied, 548 U.S. 1148 (2010).

In

addition, a court may consider documents attached to the complaint
or incorporated by reference.
III.

Id.

COUNT ONE AND GLOBAL DEFENSES.
In this section of the court’s order, the court shall address

defendants’ arguments against Count One and some of the arguments
defendants have asserted broadly against all of the counts in the
first

amended

complaint.

The

court

shall

address

defendants’

statute of limitations arguments in a separate section of this
opinion.
Count One alleges that each defendant individually engaged in
illegal tying contracts in violation of § 1 of the Sherman Act.
Section

1

of

the

Sherman

Act

prohibits

“[e]very

contract,

combination in the form of trust or otherwise, or conspiracy, in
restraint

of

U.S.C. § 1.

trade

or

commerce

among

the

several

States.”

15

Any “restraint of trade” is not prohibited by § 1 of

the Sherman Act, only “unreasonable restraints of trade.”

Law v.

NCAA, 134 F.3d 1010, 1016 (10th Cir.) cert. denied, 525 U.S. 822
(1998).
“Generally, a tying arrangement, is illegal under § 1 of the
Sherman Act if it can be shown that: (1) two separate products or
7

services

are

involved;

(2)

the

sale

or

agreement

to

sell

one

product or service is conditioned on the purchase of another; (3)
the

seller

has

sufficient

economic

power

in

the

tying

product

market to enable it to restrain trade in the tied product market;
and (4) a not insubstantial amount of interstate commerce in the
tied product is affected.”

Sports Racing Services, Inc. v. Sports

Car Club of America, Inc., 131 F.3d 874, 886 (10th Cir. 1997).
Whether an alleged restraint of trade is unreasonable depends
upon a “rule of reason” or a “per se” analysis.

A “rule of reason”

analysis, the most commonly used method, requires weighing all of
the

circumstances

of

a

case

to

decide

whether

a

restrictive

practice imposes an unreasonable restraint on competition.

Gregory

v. Fort Bridger Rendezvous Ass’n, 448 F.3d 1195, 1203 (10th Cir.
2006)(citing Diaz v. Farley, 215 F.3d 1175, 1182 (10th Cir. 2000)).
Some

types

of

anticompetitive

conduct,

however,

have

been

considered in some situations to be “per se” unreasonable because
their effects on competition lack any redeeming virtue and so are
presumed to be unreasonable and therefore illegal.
A.

Id.

Per se analysis.

Count One does not state a plausible Sherman Act violation
under per se analysis.

The Tenth Circuit has stated that:

“A tie-

in constitutes a per se section 1 violation if the seller has
appreciable economic power in the tying product market and if the
arrangement affects a substantial volume of commerce in the tied
8

product market.”

Multistate Legal Studies, Inc. v. Harcourt Brace

Jovanovich Legal and Professional Publications, Inc., 63 F.3d 1540,
1546 (10th Cir. 1995) cert. denied, 516 U.S. 1044 (1996).
Circuit has also observed, that:

The Tenth

“Per se violations are restricted

to those restraints that would always or almost always tend to
restrict competition and decrease output.

This concern is greatest

when actual competitors enter agreements because cooperation among
would-be

competitors

will

deprive

the

market

place

of

the

independent centers of decisionmaking that competition assumes and
demands,

and

risks

anti-competitive

effects.

Vertical

arrangements, on the other hand, do not generally give rise to the
same concerns and often have pro-competitive effects.”

Campfield

v. State Farm Mutual Automobile Ins. Co., 532 F.3d 1111, 1119 (10th
Cir. 2008)(interior quotations and citations omitted).
The first amended complaint fails to state a per se tying
claim for the following reasons.
decision,

the

court

finds

First, as discussed later in this
that

allegations are insufficiently pled.
individual

defendant

and

a

any

horizontal

conspiracy

Second, contracts between an

purchaser

of

med-surg

supplies

are

vertical arrangements, and therefore less likely to be a per se
violation.

Third, the alleged market power of each individual

defendant is insufficient for the defendant to be held liable in a
per se tying case.

See Jefferson Parish Hosp. Dist. No. 2 v. Hyde,

466 U.S. 2, 26-29 (1984)(30% market share absent other factors is
9

insufficient to establish market power for a per se tying claim);
Times-Picayune Publishing Co. v. United States, 345 U.S. 594, 61113

(1953)(40%

of

sales

insufficient

for

per

se

unlawful

tying

particularly when that share does not greatly exceed the share of
any other competitor).

Plaintiff alleges no factors in the first

amended complaint from which the court could infer that discovery
would produce evidence to support a per se tying claim.
B.

Rule of reason analysis

To properly allege a tying claim which satisfies the rule of
reason analysis, a plaintiff must allege facts showing that the
contract

or

agreement

in

question

effect on competition in general.

had

a

substantially

adverse

See Gregory, 448 F.3d at 1205

(quoting Law, 134 F.3d at 1019 for the proposition that plaintiff
bears

the

initial

burden

of

showing

that

an

agreement

had

a

substantially adverse effect on competition); see also, George Haug
Co. Inc. v. Rolls Royce Motor Cars Inc., 148 F.3d 136, 139 (2d Cir.
1998).

While there is much case authority for the proposition that

injury to a plaintiff does not suffice to show an adverse effect on
competition in general, plaintiff’s alleged position as “the only
significant

specialty

distributor

of

sutures

and

endo

products”

(Doc. No. 19, ¶ 50) as well as the alleged target of defendants’
tying activity is a distinguishing factor, particularly when it is
asserted that plaintiff has “lost a significant number of existing
and

potential

customers”

(¶

8)
10

and

(at

¶

56)

that

“numerous

hospitals

and

other

acute

care

providers

that

would

prefer

to

purchase sutures and endo products from [plaintiff] are prohibited
from

doing

so.”

See

Apani

Southwest,

Inc.

v.

Coca-Cola

Enterprises, 128 F.Supp.2d 988, 997 (N.D.Tex. 2001)(alleged injury
to plaintiff may be sufficient to allege substantial injury to
competition); see also, Spanish Broadcasting System of Fla., Inc.
v. Clear Channel Communications, Inc., 376 F.3d 1065, 1072-73 (11th
Cir. 2004)(acknowledging that under some circumstances damage to a
critical competitor may also damage competition in general). In
addition,

plaintiff

alleges

that

the

tying

activity

deprives

numerous purchasers’ access to a more comprehensive product line,
superior service and lower distribution fees.
C.

Other arguments
1.

Strict tie-ins versus discounts

Defendants argue that plaintiff cannot proceed upon a tying
claim because defendants allow for separate purchases of med-surg
supplies and sutures and endo products. As described previously,
instead of requiring that med-surg supplies and suture and endo
products
discounts

be

purchased

on

together,

the

of

sale

each

med-surg

defendant

supplies

if

is
90%

offering
of

the

purchaser’s sutures and endo products needs are purchased from the
defendant.

The court disagrees with defendants’ argument.

The

Tenth Circuit has held that a tying claim was stated when economic
penalties (as well as outright prohibition of separate purchases)
11

were used to induce persons to purchase a grave marker from the
cemetery providing the grave plot instead of buying the marker
separately

from

a

grave

marker

builder

or

dealer.

Monument

Builders v. American Cemetery Assn., 891 F.2d 1473, 1476 (10th Cir.
1989) cert. denied, 495 U.S. 930 (1990).

Moreover, as the Supreme

Court has commented, “the Sherman Act does not prohibit ‘tying’; it
prohibits ‘contract[s] . . . in restraint of trade.’”
Parish, 466 U.S. at 21 n. 34.

Jefferson

The question is not so much whether

the alleged arrangement is a “tying agreement” as “whether there is
a

possibility

that

.

.

.

competition

on

the

merits

[has

been

foreclosed] in a product market distinct from the market for the
alleged

tying

Contractors

of

item.”

Id.

California,

at

21;

Inc.

v.

see

also,

Associated

California

State

General

Council

of

Carpenters, 459 U.S. 519, 528 (1983)(“[a]n agreement to restrain
trade may be unlawful even though it does not entirely exclude its
victims from the market”).

So, plaintiff need not allege a strict

tie-in arrangement in which a purchaser is required to purchase two
separate products together in order to assert a
of the Sherman Act.
sources

other

than

violation of § 1

While some purchasers do buy sutures from
defendants,

this

is

not

fatal

to

Count

One

because it does not foreclose the plausibility of plaintiff’s claim
that defendants’ discounting activity has restrained trade on the
merits

for

a

substantial

amount

of

market for sutures and endo products.
12

interstate

commerce

in

the

2.

Insufficient market power

Defendants

contend

that

plaintiff

has

not

asserted

that

defendants have sufficient market power in the tying product market
to

plausibly

allege

the

ability

to

coerce

sutures and endo products from defendants.

a

purchaser

to

buy

As already noted, the

first amended complaint states that the alleged tying activity has
caused plaintiff to lose a significant number of customers.
this

allegation

plaintiff’s
barriers,

(which

must

allegations
and

parallel

be

considered

regarding
pricing

as

predatory

behavior

by

true)

as

pricing,
two

From

well

as

entry

substantial

competitors in the med-surg market, it is plausible to infer that
each defendant has sufficient market power in the tying products to
coerce buyers to accept the alleged tying arrangement.3
defendants’

contention,

plaintiff’s

substantial

Contrary to

position

in

the

sutures and endo products market also does not preclude plaintiff
from alleging an antitrust injury.

See Sterling Merchandising,

Inc. v. Nestle, S.A., 656 F.3d 112, 122 (1st Cir. 2011)(success in
the market does not preclude plaintiff from proving damages caused
by an antitrust violation); Masimo Corp. v. Tyco Health Care Group,
2006 WL 1236666 *6 (C.D.Cal. 3/22/2006)(jury could find substantial
market

foreclosure

and

anticompetitive

3

effects

even

though

Defendant Cardinal has cited Bailey’s, Inc. v. Windsor Am., Inc., 948 F.2d
1018, 1032 (6th Cir. 1991) for the proposition that a defendant whose share of the
market is less than that of other competitors lacks the market power to restrain
trade in violation of § 1 of the Sherman Act. The market share of the defendant
in that case, however, was much less than the alleged market share of defendants
Cardinal and O&M in this case.

13

plaintiff was able to grow revenue and capture new sales in the
face of defendant’s exclusive dealing discounts).
3.
A

Relevant market definition

proper

determining

definition

whether

anticompetitive,

a

whether

of

“relevant

restraint
a

of

market”

trade

substantial

amount

critical

to

unreasonable

is

is

or

commerce

has

been

foreclosed, and whether a level of market power has been leveraged,
attempted

or

Therefore,

achieved

it

plausibility

of

is
an

in

violation

difficult

or

antitrust

claim

of

antitrust

impossible
if

to

the

statutes.

determine

relevant

market

the
is

untenably defined.
Defendants contend that Count One and the rest of plaintiff’s
antitrust claims must be dismissed because plaintiff has improperly
confined its definition of the relevant market to domestic acute
care providers who purchase med-surg supplies.4

Defendants suggest

that their market share may be less than alleged by plaintiff if
non-acute

care

providers

who

purchase

med-surg

supplies

are

included.

This is a difficult issue to determine upon a motion to

dismiss although it has happened in some cases when the definition
appears untenable on its face.
Domino’s

Pizza,

Inc.,

124

E.g., Queen City Pizza, Inc. v.

F.3d

430

(3rd

Cir.

1997)(affirming

dismissal for failure to plead a valid relevant market including

4

Plaintiff also alleges that each product category within the broader market of
med-surg products constitutes a relevant market or submarket.
Doc. No. 19, ¶¶
25-26.

14

interchangeable

pizza

ingredients,

supplies,

materials

and

distribution services).
This is not an instance in which the court can determine that
plaintiff’s relevant market is flawed on its face.

As suggested

above, many courts recognize that the definition of the relevant
market and a defendant’s power in that market are issues of fact.
E.g., Todd v. Exxon Corp., 275 F.3d 191, 199-200 (2d Cir. 2001);
Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 199 (3d Cir.
1992) cert. denied, 507 U.S. 921 (1993); Westman Comm’n Co. v.
Hobart Int’l, Inc., 796 F.2d 1216, 1220 (10th
denied,

486

U.S.

1005

(1988);

Christou

v.

Cir. 1986) cert.

Beatport,

LLC,

849

F.Supp.2d 1055, 1066 (D.Colo. 2012); Allen v. Dairy Farmers of
America, Inc., 748 F.Supp.2d 323, 336-37 (D.Vt. 2010); Lockheed
Martin Corp. v. Boeing Co., 314 F.Supp.2d 1198, 1225 (M.D.Fla.
2004).

The courts in Allen and Lockheed Martin discuss in some

detail the viability of defining a product market on the basis of
customer traits.
Lockheed

Martin,

In Allen, a motion to dismiss is denied and in
a

motion

to

dismiss

is

granted.

Both

courts

recognize that a relevant product market may sometimes be limited
to a portion of customers based on a distinction in the product
sold to those customers.

Allen, 748 F.Supp.2d at 336; Lockheed

Martin, 314 F.Supp.2d at 1226.

The Allen court observed that many

cases which decided this question resolved summary judgment motions
and that a court should consider such factual issues as “industry
15

recognition of the market, the commercial realities of, among other
things, production, transportation, accessibility of plans, pricing
and consumer preferences, as well as ‘the actual dynamics of the
market.’”

Id. (quoting Geneva Pharms. Tech. Corp. v. Barr Labs.,

Inc., 386 F.3d 485, 496 (2d Cir. 2004)).

In Lockheed Martin, 314

F.Supp.2d at 1228, the court observed that consumer preferences may
affect cross-elasticity (i.e., whether demand shifts from goods of
one type to goods of a similar type in response to increases in
price) which will determine the breadth of the product market.5
As plaintiff has noted, in White and White, Inc. v. American
Hospital

Supply

Corp.,

540

F.Supp.

951,

988

(W.D.Mich.

1982),

hospital customers were a parameter of a relevant market determined
by

a

district

court

in

an

antitrust

lawsuit

where

a

med-surg

supplies distributor was suing a national distributor of hospital
supplies.
surg

The court made a finding that hospital demand for med-

products

differs

from

the

demand

requirements

of

other

consumers because hospitals demand a higher volume of product, a
broader product mix and a higher level of vendor service than do
other customers; it further found that hospitals were considered a
distinct

customer

class

by

the

med-surg

5

supply

business.

Id.

The type of factual analysis described in Allen and Lockheed Martin occurred in
Thurman Industries, Inc. v. Pay ‘N Pak Stores, Inc. 875 F.2d 1369, 1374 (9th Cir.
1989) where a plaintiff unsuccessfully argued upon summary judgment that a market
should be defined by customers of home center stores that provide one-stop
service as opposed to less comprehensive retail outlets.
See also, Westman
Comm’n Co., 796 F.2d at 1221-22 (discussing markets defined by consumers who
demand a “cluster” of goods but not finding such to be the case for restaurant
equipment purchasers).

16

Although the district court’s outcome was reversed in part because
of an erroneous analysis of the geographic market (see 723 F.2d 495
(6th Cir. 1983)), the district court’s opinion confirms that an
elaborate factual analysis may be required to determine a proper
relevant market in the distribution of med-surg supplies or sutures
and endo products.
After due consideration, the court cannot state at this time
that plaintiff’s conception of the relevant market or submarket is
so

flawed

that

it

renders

plaintiff’s

claims

implausible

or

impossible to consider.
4.

Antitrust injury

Defendant Cardinal contends that all of plaintiff’s antitrust
claims must be dismissed because plaintiff has failed to properly
allege

the

remedy.

type
We

of

reject

injury
this

that

antitrust

contention.

laws

are

Plaintiff

designed
alleges

to

that

defendants’ tying arrangements reduce the level of competition in
the distribution of sutures and endo products; that they limit a
customer’s

choice

of

sutures

and

endo

products;

and

that

they

deprive customers of advantages in delivery costs and procedures.
This is sufficient to allege an antitrust injury.

See Palmyra Park

Hosp., Inc. v. Phoebe Putney Mem’l Hosp., 604 F.3d 1291, 1303 (11th
Cir. 2010)(tying claim alleging less competition for tied products
and fewer choices for consumers adequately expresses an antitrust
injury).

Defendant Cardinal argues that plaintiff’s allegations of
17

antitrust injury are too general and not supported by facts.

We

reject this point and refer to the prior Twombly discussion which
dismisses any requirement for “detailed factual allegations.”

See

also, Erickson v. Pardus, 551 U.S. 89, 93 (2007)(“[s]pecific facts
are not necessary”).

In sum, plaintiff’s allegations of antitrust

injury are sufficiently specific and plausible.
IV.

COUNTS THREE AND FOUR
Counts Three and Four allege a conspiracy to violate §§ 1 and

2 of the Sherman Act.

As mentioned earlier, § 1 prohibits among

other agreements, conspiracies in restraint of trade or commerce.
Section 2 of the Sherman Act prohibits persons from monopolizing,
attempting to monopolize or conspiring to monopolize any part of
interstate trade or commerce.
conspiracy

under

federal

15 U.S.C. § 2.

antitrust

laws

is

An agreement or

said

to

exist

when

“there is a unity of purpose, a common design and understanding, a
meeting

of

scheme.”

the

minds,

or

a

conscious

commitment

to

a

common

West Penn Allegheny Health Sys. v. UPMC, 627 F.3d 85, 99

(3rd Cir. 2010) cert. denied, 132 S.Ct. 98 (2011).

“A plaintiff may

plead an agreement by alleging direct or circumstantial evidence,
or a combination of the two,” but allegations of direct evidence,
that are adequately detailed, are sufficient alone.
Plaintiff

alleges

response

to

products;

namely,

that

plaintiff’s

defendants

success

defendants

tied
18

in
the

did

the

selling
sale

of

Id.
same

suture
suture

thing

in

and

endo

and

endo

products to the sale of other products in the med-surg basket.
first

amended

complaint

(Doc.

No.

19)

contains

the

following

allegations:
Defendants provide in their contracts that, if an acute
care
organization
wants
to
purchase
distributors’
products in the Med-Surg basket excluding sutures and
endo, the customer must also purchase sutures and endo
products from this distributor; otherwise, Defendants
charge the hospital or other acute care organization a
penalty in the form of a prohibitive distribution fee
applicable to the entire Med-Surg basket.
Defendants
divide purchase requirements between Med-Surg products
excluding sutures and endo, and sutures and endo
products.
If the acute care provider does not purchase
90% or more of its sutures and endo needs from
Defendants, it must pay a penalty on its entire Med-Surg
spend.
That penalty can range from 1 percent to 5
percent. ¶ 44.
Defendants
also
employ
the
alternative
tactic
of
repackaging distribution penalty programs as purported
discount programs. Defendants offer a bundle of Med-Surg
products, including sutures and endo products, for a socalled discounted distribution fee and eliminate the
discount when sutures and endo are not included in the
basket. ¶ 47.
[T]he allocation of this whole basket “discount” to
sutures and endo products brings the price of the
Defendants’ sutures and endo offerings below cost. ¶ 48.
This predatory pricing enhances Defendants’ market power,
raises barriers to entry and impedes the ability of
[plaintiff] to compete. ¶ 49.
These exclusionary practices clearly are directed at
[plaintiff].
Sutures and endo are the only product
categories in the entire Med-Surg basket subject to
Defendants’ illegal tying and bundling arrangements.
Further, [plaintiff] is the only significant specialty
distributor of sutures and endo products. ¶ 50.
[T]he exclusionary practices directed at [plaintiff] and
employed by [defendants] are strikingly similar. ¶ 51.
19

The

The
Defendants’
lock-step
implementation
of
nearly
identical penalty programs defies each distributor’s
independent economic interests.
One would expect, for
example, in response to [defendant] Cardinal’s imposition
of contractual penalties on acute care providers who seek
to purchase from [plaintiff], that [defendant] O&M –
acting independently – would seek these customers’
business by offering Med-Surg products without the
penalty.
Instead, [defendant] O&M imposes a similar
regime of contractual penalties and bundling that does
not
challenge
[defendant]
Cardinal.
In
short,
[defendants] present a united front against acute care
providers’ dealing with [plaintiff]. ¶ 52.
There are no legitimate business justifications for
Defendants’ anti-competitive practices.
Any purported
legitimate business justifications are mere pretexts.
¶
53.
The Supreme Court has stated that when alleging a conspiracy
in violation of antitrust laws, a complaint must contain “enough
factual matter (taken as true) to suggest that an agreement was
made.”

Twombly, 550 U.S. at 556.

The Court continued that:

[L]awful parallel conduct fails to bespeak unlawful
agreement . . . therefore, . . . an allegation of
parallel conduct and a bare assertion of conspiracy will
not suffice.
Without more, parallel conduct does not
suggest conspiracy, and a conclusory allegation of
agreement at some unidentified point does not supply
facts
adequate
to
show
illegality.
Hence,
when
allegations of parallel conduct are set out in order to
make a[n] [antitrust] claim, they must be placed in a
context
that
raises
a
suggestion
of
a
preceding
agreement, not merely parallel conduct that could just as
well be independent action.
Id. at 556-57.

In Twombly, the Court held that alleged competitive

reticence among regional telephone companies was an insufficient
basis from which to infer conspiratorial agreement (as opposed to

20

independent parallel conduct) since the plaintiff did not allege
that

competition

“potentially

against

any

more

other

regional

lucrative

than

telephone

other

companies

opportunities

pursued by” the companies during the same period.

was

being

Id. at 568.

In the case at bar, plaintiff is alleging that the parallel
conduct

described

construed

as

in

the

circumstantial

first

amended

evidence

of

complaint
a

should

conspiracy

be

because,

instead of challenging defendant Cardinal by offering its med-surg
products without a penalty for purchasing sutures and endo products
from

a

different

similar

to

competition

distributor,

defendant
in

the

defendant

Cardinal
market

O&M

directed

for

sutures

employed
against
and

a

program

plaintiff’s

endo

products.

Plaintiff, however, does not explain why it would be more lucrative
for defendant O&M to challenge defendant Cardinal instead of taking
the

approach

that

O&M

allegedly

has

taken.

Other

courts

have

observed that “in a highly concentrated market, any single firm’s
price and output decisions will have a noticeable impact on the
market and on its rivals such that when any firm in that market is
deciding on a course of action, any rational decision must take
into account the anticipated reaction of the other firms.”

In re

Insurance Brokerage Antitrust Litigation, 618 F.3d 300, 321 n.19
(3rd

Cir.

2010)(interior

citations

omitted).

Thus,

conscious

parallelism is not uncommon or unlawful in certain circumstances.
Id., citing Twombly, at 553-54.
21

Indeed, each defendant has an

independent

incentive

to

prevail

in

its

competition

against

plaintiff as well as against other competing companies.
Plaintiff does not allege any circumstances, aside from the
alleged action against interest, which supposedly supply a factual
context

to

support

an

inference

that

defendants

agreement to engage in parallel conduct.

had

a

prior

Plaintiff’s contention

that defendants acted against interest is not sufficient to raise a
plausible inference of conspiracy because there is no compelling
logic supporting that contention.

The fact that a defendant could

have chosen a different strategy does not produce an inference that
the choice of a strategy similar to that of a fellow competitor is
a sign of conspiracy.

In the absence of any other contextual

support from which to infer a conspiracy, the court agrees with
defendants

that

plaintiff

has

failed

to

adequately

allege

a

conspiracy to violate the antitrust laws.
V.

COUNTS TWO AND FOUR
Counts Two and Four of the first amended complaint allege

violations of § 2 of the Sherman Act.

Plaintiff alleges unlawful

monopolization and attempted monopolization in Count Two; plaintiff
alleges a conspiracy to monopolize in Count Four.

To state a

monopolization claim, a plaintiff must allege facts supporting an
inference of:

“1) the possession of monopoly power in the relevant

market and 2) the willful acquisition or maintenance of that power
as distinguished from growth or development as a consequence of a
22

superior product, business acumen, or historic accident.”

Full

Draw Productions v. Easton Sports, Inc., 182 F.3d 745, 756 (10th
Cir. 1999)(interior quotation omitted).

Attempted monopolization

requires

market;

allegations

probability

of

of

success

1)
in

a

relevant

monopolizing

the

2)

relevant

a

dangerous
market;

3)

specific intent to monopolize; and 4) conduct in furtherance of
such

an

attempt.

TV

Comm’ns

Network,

Inc.

v.

Turner

Network

Television, Inc., 964 F.2d 1022, 1025 (10th Cir.) cert. denied, 506
U.S. 999 (1992).
To allege a conspiracy to monopolize claim, a plaintiff must
plead facts which allege:

“1) the existence of a combination or

conspiracy to monopolize; 2) overt acts done in furtherance of the
combination or conspiracy; 3) an effect upon an appreciable amount
of interstate commerce; and 4) a specific intent to monopolize.”
Lantec

Inc.

v.

Novell,

Inc.,

306

F.3d

(10th

Cir.

monopolization

and

1003,

1028

2002)(interior quotations omitted).
Defendants

allege

that

plaintiff’s

attempted monopolization claims are inadequately pleaded, in part,
because
monopoly
dangerous

plaintiffs
power

or

have

not

that

defendants’

probability

of

alleged

attaining

that
actions

monopoly

defendants
have

possess

produced

power.

As

a

noted

before, plaintiff alleges that defendant O&M has 39% of the acute
care

market

for

the

distribution

of

med-surg

supplies

and

for

sutures and endo products and that defendant Cardinal has 33% of
23

those markets.

This means, of course, that other companies share

28% of those markets.
The court agrees with defendants that plaintiff has failed to
plead facts which demonstrate a real possibility that discovery
would produce proof that defendants possess monopoly power or that
defendants’
attaining

actions

monopoly

have

produced

power.

The

a

Tenth

dangerous
Circuit

probability

held

in

of

Colorado

Interstate Gas Co. v. Natural Gas Pipeline Co., 885 F.2d 683, 694
(10th Cir. 1989) that while a 41% market share indicates a firm has
“substantial

economic

power

in

the

market,”

this

“proximity

to

monopolistic status” was not sufficient under the facts to indicate
a capacity to raise the market share to a monopolistic level.

The

Tenth Circuit also observed in that case that most lower courts had
held that a 70% to 80% market share was necessary to indicate
monopoly power.6

Id. at 694 n. 18.

The following year (1990), the

Tenth Circuit in Reazin v. Blue Cross and Blue Shield of Kansas,
Inc., 899 F.2d 951, 968 (10th Cir.) cert. denied, 497 U.S. 1005
(1990)

held

that

market

share

percentages

may

give

rise

to

presumptions, “but will rarely conclusively establish or eliminate

6

This conclusion is supported by more recent reviews of case law. E.g., In re
Pool Products Distribution Market Antitrust Litigation, 2013 WL 1556391 **10-11
(E.D.La. 4/11/2013); Kolon Industries, Inc. v. E.I.DuPont De Nemours and Co.,
2012 WL 1155218 **9-11 (E.D.Va. 4/5/2012); Loren Data Corp. v. GXS, Inc., 2011 WL
3511003 *7 (D.Md. 8/9/2011)(50% or 60% is insufficient usually, but other
relevant factors should be considered); see also, Cohlmia v. St. John Medical
Center, 693 F.3d 1269, 1283 (10th Cir. 2012)(citing IIB Areeda & Hovenkamp,
Antitrust Law 250 (3d ed. 2006) as stating, “We . . . presume that market shares
below 50 or 60 percent do not constitute monopoly power . . . . [and e]ven
without an absolute rule, a clear presumption will almost always be decisive.”).

24

market or monopoly power.”
of

entry

monopoly
capital

barriers
power.

costs,

was
Id.

legal

buyer preferences.

The court advised that a consideration

relevant
Such

or

Id.

to

entry

regulatory

the

analysis

barriers

of

could

requirements,

market

include

and

or

high

entrenched

A court may also look at market trends and

the number and strength of other competitors.

Shoppin’ Bag of

Pueblo, Inc. v. Dillon Co., 783 F.2d 159, 161-62 (10th Cir. 1986).
In this case, plaintiff’s allegations do not support a viable
inference of monopolization.

There are no allegations of market

share or ability to control price and competition which support a
reasonable inference that either defendant has monopoly power.

The

first amended complaint asserts that the alleged tying and discount
programs raise barriers to entry and impede plaintiff’s ability to
compete,

and

that

the

alleged

below-cost

pricing

has

caused

plaintiff to lose “a significant number of existing and potential
customers.”

¶ 7.

Plaintiff has also asserted in opposition to the

motions to dismiss that high capital costs are an entry barrier.
But, no facts are alleged to support an inference that defendants’
programs

and

produced

a

practices,

dangerous

monopoly power.
defendant

which

allegedly

probability

of

began

either

in

2008,

defendant

have

attaining

Moreover, the substantial market share that each

possesses

is

a

factor

which

undermines

a

claim

that

either defendant possesses monopoly power or a dangerous potential

25

to attain such power.

Bayer Schering Pharma AG v. Sandoz, Inc.,

813 F.Supp.2d 569, 580 (S.D.N.Y. 2011).
As discussed earlier, plaintiff’s allegations of conspiracy
are insufficiently pled.
amended

complaint

sets

The court does not believe the first

forth

facts

from

which

one

can

infer

a

reasonable possibility that defendants conspired to monopolize or
conspired to attempt to monopolize the relevant markets in this
case.

Accordingly, the court rejects plaintiff’s suggestion that

the court should consider the aggregate market power of defendants
in deciding whether plaintiff has adequately pleaded claims under §
2 of the Sherman Act.

Moreover, it appears that most courts have

rejected shared or joint monopoly arguments when analyzing § 2
claims, finding that such claims contradict the basic concept that
a monopoly is the domination of a market by a single firm.

E.g.,

Terminalift

Union

LLC

v.

International

Longshore

and

Warehouse

Local 29, 2013 WL 2154793 ** 3-4 (S.D.Cal. 5/17/2013); Oxbow Carbon
& Minerals LLC v. Union Pacific R. Co., ___ F.Supp.2d ___, 2013 WL
673778

*6

Laboratories,

(D.D.C.
Inc.,

2013);
661

RxUSA

F.Supp.2d

Wholesale,
218,

234-35

Inc.

v.

Alcon

(E.D.N.Y.

2009);

Arista Records LLC v. Lime Group LLC, 532 F.Supp.2d 556, 579-80
(S.D.N.Y. 2007).
For these reasons, Counts Two and Four fail to state a claim.

26

VI.

COUNT FIVE
Count Five of the first amended complaint alleges exclusive

dealing

in

violation

of

defendant individually.

§

3

of

the

Clayton

Act

against

This section makes it unlawful:

each

“for any

person engaged in commerce, in the course of such commerce, to . .
.

make

a

sale

consumption,

or

or

contract

resale

for

within

sale

the

of

United

goods

.

States

.
.

.
.

for
.

use,

on

the

condition, agreement, or understanding that the lessee or purchaser
thereof shall not use or deal in the goods . . . of a competitor or
competitors of the . . . seller, where the effect of such lease,
sale,

or

contract

for

sale

or

such

condition,

agreement,

or

understanding may be to substantially lessen competition or tend to
create a monopoly in any line of commerce.”
“To

prove

a

violation

under

§

3

of

the

15 U.S.C. § 14.
[Clayton]

Act,

a

plaintiff must show the following: 1) that the violator is engaged
in interstate commerce and that the alleged unlawful act occurred
in

the

course

of

such

interstate

commerce,

2)

the

violation

involved a contract for sale, a sale, or a lease, 3) that the
agreement is for goods, wares, merchandise, machinery, supplies or
other tangible commodities, 4) that the agreement was conditioned
or made on the understanding that the buyer or lessee will not use
or deal in the goods of a competitor of the seller or lessor, [and]
5) that the probable effect of the agreement is to substantially
lessen competition or create a monopoly.”
27

Apani Southwest, 128

F.Supp.2d at 992; see also, Watkins & Son Pet Supplies v. Iams Co.,
107 F.Supp.2d 883, 899 (S.D.Ohio 1999)(listing fewer but similar
elements).
Plaintiff asserts that defendants have made sales of med-surg
products based on the condition that the purchaser will not deal in
plaintiff’s sutures and endo products.
that

this

“exclusive

dealing”

has

Plaintiff further asserts
foreclosed

plaintiff

from

substantial portions of the markets for the distribution of sutures
and endo products and has substantially lessened competition in
those markets.
Defendants

argue

that

defendants’

discount

programs

do

not

constitute exclusive dealing agreements for the purposes of the
Clayton Act because the agreements permit purchasers to buy some
percentage of sutures and endo products from distributors other
than

defendants.

The

Clayton

Act,

however,

is

not

expressly

limited to contracts which completely exclude the purchase of a
competitor’s goods and courts have construed the Act as applying to
contracts that are not 100% exclusive.

ZF Meritor, LLC v. Eaton

Corp., 696 F.3d 254, 283 (3d Cir. 2012) cert. denied, 133 S.Ct.
2025 (2013).
Defendants also argue that plaintiff has not alleged that the
discount

programs

described

in

the

first

amended

complaint

are

actually used by purchasers of sutures and endo products.

Although

no

one

names

are

alleged

by

plaintiff,
28

the

court

believes

can

reasonably infer from the complaint that the discount programs are
used

and

are

the

reason

why

otherwise would have had.

plaintiff

has

lost

customers

it

See Kay v. Bemis, 500 F.3d 1214, 1217

(10th Cir. 2007)(the court may accept reasonable inferences from a
complaint’s allegations as true).
the discounts are not coercive.

Defendants further claim that

This claim, however, is a factual

issue as opposed to a matter of adequate pleading.
contend that discounts can be pro-competitive.

Defendants also

Again, while this

may be true, it is part of a rule of reason analysis which in this
context is not so straightforward that the court can rule at the
pleading

stage

that

plaintiff’s

exclusive

dealing

claim

is

implausible.
Similarly,
regarding

the

the
level

court
of

finds

market

that

defendants’

foreclosure

do

not

dismissal of plaintiff’s exclusive dealing claim.

arguments

warrant

the

A number of

issues may be relevant to a consideration of whether an exclusive
dealing arrangement forecloses a substantial part of the market.
For instance, in Tampa Electric Co. v. Nashville Coal Co., 365 U.S.
320, 329 (1961), the Court suggested it was necessary to “weigh the
probable effect of the contract on the relevant area of effective
competition,

taking

into

account

the

relative

strength

of

the

parties, the proportionate volume of commerce involved in relation
to the total volume of commerce in the relevant market area, and
the probable immediate and future effects which pre-emption of that
29

share of the market might have on effective competition therein.”
The Court also considered: the duration of the contract; whether
there were dominant sellers in the market or a “myriad [of] outlets
with

substantial

sales

volume;”

if

there

was

an

industry-wide

practice of exclusive contracts; and if there were pro-competitive
or pro-consumer benefits to such contracts.

Id. at 334.

Some

courts have made reference to 30% or 40% as a threshold level by
which

to

screen

exclusive

dealing

claims.

E.g.,

Sterling

Merchandising, 656 F.3d at 123-24 (foreclosure levels are unlikely
to be of concern where they are less than 30 or 40 percent); B & H
Medical, LLC v. ABP Admin., Inc., 526 F.3d 257, 266 (6th Cir. 2008)
(same).

Even in these cases, the screening was done at the summary

judgment level.
Here, plaintiff alleges that defendants are foreclosing from
plaintiff’s competition a percentage of the market equivalent to
each defendant’s market share for med-surg supplies, which is 39%
for defendant O&M and 33% for defendant Cardinal.

This is not an

implausible claim and given the number of other factors which may
be relevant to a rule of reason analysis, the court shall not
decide at the pleading stage that plaintiff has failed to plead
adequate foreclosure levels to go forward with Count Five.
VII.

COUNTS SIX AND SEVEN – STATE LAW CLAIMS
A.

Kansas Restraint of Trade Act – Count Six

30

Plaintiff asserts a violation of the Kansas Restraint of Trade
Act (“KRTA”) in Count Six and makes only a general citation to
K.S.A. “50-101 et. seq.”
citation

to

K.S.A.

Defendant Cardinal contends that this

50-101

et.

seq.

is

inadequate

to

provide

defendant with proper notice of the state law claims plaintiff is
making because there are numerous sections to consider.

While this

argument has some allure, the general rule appears to be that a
complaint need not point to the appropriate statute or law in order
to raise a claim for relief; a complaint may sufficiently raise a
claim even if it points to no legal theory or even if it points to
the wrong legal theory as a basis for that claim.

Morris v.

Schroder Capital Mgmt. Intern., 445 F.3d 525, 530 n.3 (2d Cir.
2006);

Morales-Vallellanes v. Potter, 339 F.3d 9, 15 (1st Cir.

2003); Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1134 (7th Cir.
1992); Fitzgerald v. Codex Corp., 882 F.2d 586, 589 (1st Cir. 1989).
This rule appears contrary to the proposition advanced here by
defendant Cardinal.

In addition, the apparent similarity in the

federal and state antitrust law claims alleged in the first amended
complaint

should

be

sufficient

to

provide

defendants

adequate

notice of plaintiff’s state law claims.
Defendant O&M and defendant Cardinal further argue that Count
Six

should

unilateral

be

dismissed

conduct.

The

because
court

plaintiff
agrees

only

that

plaintiff

adequately alleged illegal conspiratorial conduct.
31

alleges

lawful

has

not

Plaintiff may

still

contend

however

that,

in

violation

of

K.S.A.

50-112,

defendants made contracts or agreements “with a view or which tend
to prevent full and free competition in the . . . sale of articles
imported
alleged

into
a

[Kansas].”

conspiracy

to

While
violate

plaintiff

has

antitrust

laws,

not

adequately

plaintiff

does

allege contracts which plausibly fall within the language of K.S.A.
50-112 and constitute more than mere unilateral pricing policy.
Therefore,

we

reject

defendants’

contention

that

plaintiff

has

failed to state a claim under the KRTA.
B.

Unjust Enrichment – Count Seven

Plaintiff asserts an unjust enrichment claim in Count Seven.
The essence of plaintiff’s allegations is that plaintiff has had a
“reduced presence” in the sutures and endo products markets and
that defendants’ market share is greater in those markets because
of defendants’ anti-competitive activities.

This does not state a

claim for unjust enrichment.
It appears undisputed that in Kansas the elements of an unjust
enrichment claim are: 1) a benefit conferred; 2) an appreciation or
knowledge of the benefit by the one receiving the benefit; and 3)
the acceptance or retention of the benefit under such circumstances
as to make it inequitable to retain the benefit without payment of
its value.

In re Estate of Sauder, 156 P.3d 1204, 1220 (Kan.

2007); see also Bettis v. Hall, 852 F.Supp.2d 1325, 1341 (D.Kan.
2012)(reciting similar elements).
32

Sometimes the first element is

listed

as

“a

plaintiff.”

benefit

conferred

upon

the

defendant

by

the

J.W. Thompson Co. v. Welles Products Corp., 758 P.2d

738, 745 (Kan. 1988); Haz-Mat Response, Inc. v. Certified Waste
Services

Ltd.,

910

P.2d

839,

846-47

(Kan.

1996)(quoting

J.W.

Thompson Co.); Spires v. Hospital Corp. of America, 289 Fed.Appx.
269, 272-73 (10th Cir. 5/23/2008)(citing Haz-Mat Response, Inc.);
Midwest Grain Products, Inc. v. Envirofuels Marketing, Inc., 1998
WL

63077

Freebird,

*5

(10th

Inc.

v.

Cir.
Merit

2/17/98)(quoting
Energy

Co.,

883

J.W.

Thompson

F.Supp.2d

1026,

Co.);
1038

(D.Kan. 2012)(citing Haz-Mat Response).
It is not plausible to consider plaintiff’s reduced market
presence

as

a

benefit

conferred

upon

defendants

by

plaintiff.

“Confer” means to bestow, grant, give or contribute. Oxford English
Dictionary, OED Online Version June 2013, available at www.oed.com.
Plaintiff

does

not

allege

business to defendants.

that

it

bestowed,

granted

or

gave

Plaintiff alleges that business customers

or potential business customers were lured away from purchasing
sutures and endo products from plaintiff and attracted to making
such purchases from defendants by defendants’ tying, bundling or
exclusive dealing contracts.

While plaintiff’s loss of business or

“reduced market presence” may have benefited defendants, it was not
a benefit conferred by plaintiff.

See Wichita Clinic, P.A. v.

Columbia/HCA Healthcare Corp., 45 F.Supp.2d 1164, 1206-07 (D.Kan.
1999)(profits

defendant

made

by

hiring

33

13

physicians

away

from

plaintiff clinic were not a benefit conferred by plaintiff); see
also, RESTATEMENT (FIRST) OF RESTITUTION § 1 cmt. b (1937)(a person
confers a benefit upon another if he gives to the other possession
of or interest in something valuable, performs a valuable service,
satisfies

a

debt

or

duty,

or

in

any

way

adds

to

the

other’s

security or advantage or saves the other from expense or loss).
Here,

plaintiff

does

not

benefited defendant.

allege

that

an

action

by

plaintiff

Rather, plaintiff alleges that defendants’

actions benefited defendants to plaintiff’s disadvantage.

This is

not sufficient to state an unjust enrichment claim.
VIII.

STATUTE OF LIMITATIONS AND LACHES
Defendant

Cardinal

argues

that

plaintiff’s

federal

claims

should be dismissed by virtue of the statute of limitations and the
doctrine of laches.
law

claims

Both defendants argue that plaintiff’s state

are

barred

undisputed

for

the

plaintiff’s

federal

by

the

purposes
damages

statute
of

claims

the
are

of

limitations.

motion

to

governed

by

It

dismiss
a

is

that

four-year

statute of limitations (Champagne Metals v. Ken-Mac Metals, Inc.,
458 F.3d 1073, 1088 (10th Cir. 2006)) and that this time limit is
used by some courts as a guideline in considering laches.

Aurora

Enterprises, Inc. v. National Broadcasting Co., Inc., 688 F.2d 689,
694 (9th Cir. 1982); Rite Aid Corp. v. American Exp. Travel Related
Services Co., Inc., 708 F.Supp.2d 257, 272 (E.D.N.Y. 2010); Little
Rock Cardiology Clinic, P.A. v. Baptist Health, 573 F.Supp.2d 1125,
34

1151 (E.D.Ark. 2008).

It is also undisputed that plaintiff’s state

law claims are governed by a three-year statute of limitations.
K.S.A. 60-512.
The
defenses.
n.4

(10th

S.A.,

538

statute

of

limitations

and

laches

are

affirmative

Aldrich v. McCulloch Props., Inc., 627 F.2d 1036, 1041
Cir.

1980)(statute

F.3d

1336,

affirmative defense).

of

limitations);

(10th

1341

Cir.

Grynberg

2008)(labeling

v.

Total

laches

an

Defendant can raise these defenses in a Rule

12(b) motion when (for the purposes of a limitations defense) the
dates alleged in the complaint make clear that the right sued upon
has been extinguished or (for the purposes of a laches defense)
that the facts alleged in the complaint establish that there has
been an unreasonable and prejudicial delay in asserting the claim.
See Aldrich, supra (referencing a statute of limitations defense in
a 12(b) motion); Jacobsen v. Deseret Book Co., 287 F.3d 936, 949
(10th Cir.) cert. denied, 537 U.S. 1066 (2002)(describing burden of
proof for laches).

The court should not focus upon whether the

allegations in the complaint show compliance with the statute of
limitations,

but

noncompliance.
(2007)(complaint

whether
See
need

the

Jones
not

allegations
v.

Bock,

include

facts

in

the

549

complaint

U.S.

defeating

199,

show
215

affirmative

defense of administrative exhaustion).
Defendant Cardinal contends that the facts from the complaint
demonstrate that plaintiff’s federal claims are probably barred,
35

“[u]nless the challenged conduct occurred between December 5 and
December 31, 2012.”

Doc. No. 24, p. 25. But, defendant Cardinal

does not establish that plaintiff’s allegations show noncompliance
with the statute of limitations or that plaintiff has unreasonably
delayed bringing its claims.

Therefore, the court shall reject

defendant Cardinal’s arguments that plaintiff’s federal claims are
barred under the statute of limitations or laches.
Defendants’
regards

the

argumentation

timeliness

of

suffers

plaintiff’s

from

the

state

same

law

flaw

claims.

as
The

complaint alleges that defendants initiated their alleged illegal
bundling
Plaintiff

or

tying

filed

activity

this

in

action

2008.
on

(Doc.

December

No.

5,

19,

2012.

¶

43).
These

allegations, accepted as true, do not demonstrate that defendants
entered illegal tying, bundling or exclusive dealing contracts only
prior to December 5, 2009, that is, more than three years prior to
filing the original complaint in this case.

See Tricom, Inc. v.

Electronic

741,

Data

Systems

Corp.,

902

F.Supp.

745

(E.D.Mich.

1995)(each tying contract signed constituted a new and independent
antitrust injury).
IX.

CONCLUSION
Consistent with the above-stated discussion, the court shall

grant in part and deny in part defendants’ motions to dismiss, Doc.
Nos. 23 and 27.

The motions are granted as to Counts Two, Three,

Four and Seven and denied as to Counts One, Five and Six.
36

Doc. No.

23 is moot as to Cardinal Health Inc.
as Doc. No. 25 is entirely moot.

The motion to dismiss filed

Plaintiff shall be granted leave

to file a second amended complaint by August 30, 2013.

The motion

to amend the memorandum in support of the motion to dismiss filed
by

defendant

granted.
granted.

Owen

&

Minor

Distribution,

Inc.

(Doc.

No.

45)

is

The request for judicial notice (Doc. No. 29) shall be
The motion for oral argument (Doc. No. 48) is denied.

IT IS SO ORDERED.
Dated this 1st day of August, 2013, at Topeka, Kansas.

s/Richard D. Rogers
United States District Judge

37