Safeway Inc. v. Abbott Laboratories
761 F. Supp. 2d 874
N.D. Cal.2011Background
- Norvir (ritonavir) is an input booster for boosted PIs and was priced at about $1.71 per day in 2000, rising dramatically in December 2003 to $8.57 per 100 mg.
- Abbott launched Kaletra (lopinavir boosted by ritonavir) in 2000, a single capsule combining two PIs; subsequent drugs Reyataz and Lexiva were introduced in 2003 and could be boosted with Norvir.
- Plaintiffs allege Abbott used anticompetitive leverage by raising Norvir prices to protect Kaletra's market share in the boosted market, affecting rivals’ prices and sales.
- Direct Purchasers seek claims under Sherman Act §2 for monopolization/attempted monopolization of the boosted market and monopolization of the boosting market; GSK adds New York good faith claim and UDTPA claim.
- Abbott moved for summary judgment; the court denied in part and granted in part, allowing predatory pricing and duty-to-deal theories to proceed on the boosted market claims, while dismissing monopoly leveraging plus and Conwood tort theories.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Monopoly power in boosted market | Direct Purchasers show direct/circumstantial power via Norvir control and market share. | Abbott contends no proven sustained monopoly power given market dynamics and output effects. | Triable issue on monopoly power; summary judgment not warranted. |
| Anticompetitive conduct in boosted market | Direct Purchasers and GSK allege predatory pricing, duty to deal, monopoly leveraging plus, and Conwood theory. | Abbott argues predatory pricing not proven under Cascade; no unlawful leverage or Conwood-type harm. | Predatory pricing and duty-to-deal viable; monopoly leveraging plus and Conwood theories rejected for §2 liability. |
| Monopoly leveraging in government-priced boosting market | Direct Purchasers rely on leveraging to extend monopoly into a government-regulated boosting market. | Linkline and Doe foreclose standalone monopoly leveraging liability; no independent leverage theory. | Summary adjudication that monopoly leveraging plus theory may not be basis for liability. |
| Antitrust injury to Direct Purchasers | Predatory pricing in a bundled Kaletra may injure Direct Purchasers by supra-competitive prices. | Brooke Group and related law require proof of injury; some analyses show injury or not depending on bundle pricing. | There is a triable issue on antitrust injury for Direct Purchasers. |
| GSK’s state-law claims—breach of implied covenant and UDTPA | GSK seeks lost profits/restitution for Lexiva promotion with Norvir and deceptive public statements. | New York law limits damages; UDTPA requires proof of unfair/deceptive acts causing injury. | New York breach of implied covenant claim survives; UDTPA claim survives except for deception-to-consumers theory. |
Key Cases Cited
- Cascade Health Solutions v. PeaceHealth, 515 F.3d 883 (9th Cir. 2008) (bundled pricing can support predatory pricing under discount attribution)
- Linkline Communications, Inc. v. Qualcomm, Inc., 555 U.S. 438 (U.S. Supreme Court 2009) (monopoly leveraging theories generally insufficient under §2)
- Rebel Oil Co. v. Atlantic Richfield Co., 51 F.3d 141 (9th Cir. 1995) (monopoly power and antitrust injury framework)
- Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451 (U.S. Supreme Court 1992) (monopoly power standard and §2 liability framework)
- Verizon Communications Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (U.S. Supreme Court 2004) (antitrust duty to deal and limits on imposing duties)
- Doe v. Abbott Laboratories, 571 F.3d 930 (9th Cir. 2009) (monopoly leveraging claims foreclosed by Linkline and Supreme Court Doe decision)
- MetroNet Servs. Corp. v. Qwest Corp., 383 F.3d 1124 (9th Cir. 2004) (Trinko factors for antitrust liability in switching contexts)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (U.S. Supreme Court 1985) (unilateral termination of a voluntary course of dealing as §2 liability basis)
- Tractebel Energy Marketing, Inc. v. AEP Power Marketing, Inc., 487 F.3d 89 (2d Cir. 2007) (lost profits as consequential damages under New York law)
- Sommer v. Federal Signal Corp., 79 N.Y.2d 540 (N.Y. 1992) (piercing liability limitation clauses requires recklessness or intentional wrongdoing)