Lenox MacLaren Surgical Corp. v. Medtronic, Inc.
2014 U.S. App. LEXIS 15049
| 10th Cir. | 2014Background
- Lenox MacLaren manufactured bone mills used in spinal-fusion surgery and sold some through a Medtronic entity; Medtronic later recalled Lenox’s mills and Medtronic-affiliates developed competing mills.
- Lenox sued four Medtronic entities (not the Medtronic Sofamor Danek USA entity that instigated the recall) alleging monopolization and attempted monopolization under Section 2 of the Sherman Act for conduct from 2007–2010.
- An earlier arbitration between Lenox and Medtronic Sofamor Danek USA resulted in an award to Lenox finding the recall unjustified.
- The district court granted summary judgment for Medtronic on both Section 2 claims; Lenox appealed.
- On appeal the Tenth Circuit reviewed summary judgment de novo, viewed evidence in Lenox’s favor, and evaluated issues concerning res judicata, market definition, monopoly power (market share and barriers to entry), exclusionary conduct (recall/trade disparagement), and competitive harm.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Res judicata: whether prior arbitration bars the antitrust claims | Arbitration involving a Medtronic affiliate did not preclude claims against the four Medtronic defendants; privity is contested | Medtronic: Lenox could have raised antitrust claims in the arbitration, so claims are barred | Not decided on appeal — court declined to resolve res judicata because privity is a factual dispute and Medtronic did not raise it below |
| Product market definition: are bone mills a separate market from hand tools | Bone mills constitute the relevant market; surgeons would not switch to hand tools after price increases | Medtronic: market should include hand tools (they perform similar function) | Fact question for jury: evidence (expert testimony, price differential, Medtronic marketing) permits bone-mill market but other conclusion also reasonable |
| Monopoly power: did Medtronic possess monopoly power in bone-mill market 2007–2010 | High market shares (97–98% in 2007; as high as 62% in 2010) plus entry barriers support monopoly power | Medtronic: market-share figures and durability overstated; entry by Stryker shows low barriers | Fact question for jury: market-share and entry-barrier evidence suffices to create triable issue on monopoly power |
| Exclusionary conduct: did Medtronic willfully acquire/maintain power via wrongful acts (recall, disparagement) | Recall and related statements were a ruse to eliminate Lenox; recall caused prolonged, nonneutralizable harm | Medtronic: conduct was not exclusionary or attributable to the defendants in this case; harm was only to Lenox | Fact question for jury: under trade-disparagement factors, Lenox presented evidence on falsity, materiality, reliance, audience, duration, and non-neutralizability to infer anticompetitive conduct |
| Harm to competition: did conduct harm market competition (not just Lenox) | Recall concentrated market power (Medtronic and Stryker), allowed supracompetitive pricing, reduced competition from smaller firms | Medtronic: Lenox only showed injury to itself; other bone-mill suppliers existed | Fact question for jury: evidence of supracompetitive prices, market concentration, and limited alternatives suffices to create triable issue on competitive harm |
| Attempted monopolization: is there intent and dangerous probability of success | Anticompetitive conduct and inferred intent support attempted monopolization and dangerous probability | Medtronic: insufficient proof of exclusionary conduct or dangerous probability | Fact question for jury: with reasonable inferences of exclusionary conduct and monopoly power, attempted monopolization survives summary judgment |
Key Cases Cited
- United States v. Grinnell Corp., 384 U.S. 563 (monopoly power and willful acquisition/maintenance elements)
- Brown Shoe Co. v. United States, 370 U.S. 294 (market definition via cross-elasticity of demand)
- SCFC ILC, Inc. v. Visa U.S.A., Inc., 36 F.3d 958 (10th Cir. 1994) (relevant-market identification for antitrust)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden rules)
- Reazin v. Blue Cross & Blue Shield of Kan., Inc., 899 F.2d 951 (10th Cir. 1990) (market-share and durability considerations in monopoly-power analysis)