Lenox MacLaren Surgical Corp. v. Medtronic, Inc.
847 F.3d 1221
10th Cir.2017Background
- In 2000 Lenox MacLaren (Lenox) entered a five-year exclusive supply agreement with MSD USA to distribute Lenox’s bone mills; MSD USA bought 500 units initially but then ceased purchases and ran a loaner program.
- In 2006 MSD USA initiated a recall after reported complaints; PS Medical (a Medtronic subsidiary) developed and began selling the Midas Rex bone mill, targeting prior Lenox users and later achieving monopoly power in the bone-mill market.
- Lenox sued MSD USA in 2007 (claims included tort and interference); the dispute proceeded to arbitration, which found MSD USA liable only for intentional interference and awarded Lenox damages; the federal case was dismissed with prejudice after settlement/arbitral award.
- In 2010 Lenox filed a new suit against four Medtronic-related corporate defendants (Medtronic, Inc.; PS Medical; MSD, Inc.; MSD Japan) asserting § 2 monopolization and attempted monopolization based on a single-enterprise theory that aggregated the conduct of the corporate family (including MSD USA).
- The district court granted summary judgment for Defendants on the ground Lenox could not prove § 2 liability as to any individual defendant; on appeal the Tenth Circuit (a prior panel) reversed as to factual sufficiency but remanded for further discovery; on remand the district court again granted summary judgment and Lenox appealed.
- The Tenth Circuit (this opinion) recognized Lenox’s single-enterprise § 2 theory as viable in the abstract but held the claims are barred by claim preclusion because treating the defendants and MSD USA as a single enterprise establishes privity with MSD USA and the earlier arbitration/dismissal was a final judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lenox could pursue non‑conspiracy § 2 monopolization/attempted‑monopolization claims by treating the Medtronic entities as a single enterprise | Lenox: Copperweld logic permits treating related corporate entities as a single enterprise; liability may be proved by aggregated enterprise conduct and each defendant only need have played a "role" in the scheme | Defendants: § 2 liability requires proof each named defendant individually satisfied the elements (or showing alter‑ego/control); otherwise summary judgment appropriate | Court: Single‑enterprise § 2 theory is viable; the enterprise’s aggregated conduct can support § 2 claims, but each defendant must have participated (court declined to fix the exact participation test here) |
| Whether Copperweld bars treating sister subsidiaries/affiliates as conspirators for § 1 but allows them to conspire under § 2 | Lenox: Copperweld prevents § 1 conspiracy attribution but does not immunize enterprise conduct from § 2 scrutiny; affiliates can be a single entity yet still violate § 2 | Defendants: Affiliates cannot be held collectively absent proof individual entities satisfied § 2 elements or controlled the actor (MSD USA) | Court: Copperweld extends to prevent intra‑enterprise conspiracy claims and its reasoning applies to § 2 conspiracy; however, § 2 monopolization/attempted monopolization claims may proceed against the enterprise as a whole (not as a § 1 conspiracy) |
| Whether Defendants are in privity with MSD USA for claim preclusion after the prior arbitration and dismissal with prejudice | Lenox: No privity because there was no alter‑ego/control relationship and Lenox did not rely on preclusion in prior proceeding; parties are separate for res judicata purposes | Defendants: If Lenox’s liability theory treats defendants and MSD USA as a single enterprise, privity follows and res judicata bars relitigation | Court: Finding Lenox’s theory requires treating defendants and MSD USA as the same enterprise; that functional identity satisfies privity for preclusion purposes; element satisfied |
| Whether Lenox had a full and fair opportunity to litigate the § 2 claims in the prior proceeding (exception to preclusion) | Lenox: It lacked a full and fair opportunity because it only discovered Defendants’ involvement during arbitration and the arbitrators lacked jurisdiction over Defendants | Defendants: Lenox discovered the relevant facts during the prior proceeding and could have amended/added claims in federal court before the dismissal; no concealment or denial of due process occurred | Court: Lenox had a full and fair opportunity—discovered facts were available during arbitration/federal case and the federal action remained pending until dismissal with prejudice; exception does not apply |
Key Cases Cited
- Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (U.S. 1984) (parent–subsidiary unity of interest; coordinated acts of a single enterprise cannot form a § 1 conspiracy)
- American Needle, Inc. v. National Football League, 560 U.S. 183 (U.S. 2010) (distinguishes unilateral and concerted conduct under Sherman Act §§ 1 and 2)
- Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 762 F.3d 1114 (10th Cir. 2014) (prior Tenth Circuit panel found evidence sufficient to create jury questions on § 2 elements and remanded for further discovery)
- Full Draw Products v. Easton Sports, Inc., 182 F.3d 745 (10th Cir. 1999) (elements of § 2 conspiracy; conspiracy, specific intent to monopolize, overt acts)
- MACTEC, Inc. v. Gorelick, 427 F.3d 821 (10th Cir. 2005) (claim preclusion may be considered as alternative basis for affirmance where raised below)