950 F.3d 911
7th Cir.2020Background
- Prime Therapeutics (a PBM part‑owned by Blue Cross Blue Shield) audited and terminated two member retail pharmacies, Sharif Pharmacy and J&S Community Pharmacy, from its network for alleged invoicing irregularities. Prime notified customers and recommended Walgreens; it also retained funds from the pharmacies.
- Plaintiffs sued under Sections 1 and 2 of the Sherman Act alleging the terminations were pretextual and intended to favor Walgreens following a Prime–Walgreens joint venture.
- J&S later was reinstated in Prime’s network and voluntarily dismissed its appeal; three J&S customers remained as plaintiffs seeking damages and (prior to reinstatement) injunctive relief restoring network participation.
- The district courts dismissed the federal antitrust claims; appeals followed. The Seventh Circuit considered mootness/standing issues for J&S and the merits for Sharif.
- The court affirmed dismissal: J&S’s injunctive claims rendered moot by reinstatement; J&S customers’ damage claims barred by Illinois Brick; Sharif’s Section 1 and 2 claims fail for lack of a properly pleaded relevant market and monopoly power. State‑law claims were dismissed without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness of J&S injunctive relief | Reinstatement request still justiciable | Reinstatement moots injunctive relief | Injunctive claims moot after reinstatement; dismissal affirmed as modified |
| J&S customers' right to recover damages | Customers suffered concrete harm from loss of convenient pharmacy | Customers are indirect purchasers; J&S was the direct victim | Damages claims barred by Illinois Brick doctrine; customers lack antitrust standing |
| Section 1 (exclusive dealing/refusal to deal) as to Sharif | Prime–Walgreens JV and termination scheme function as exclusive dealing that harms competition | No horizontal agreement or per se violation; plaintiffs must plead market power under rule of reason | Section 1 claim fails: no plausible allegation of monopoly/market power; dismissal affirmed |
| Section 2 (monopolization/attempt) as to Sharif | Prime/Walgreens conduct amounts to unlawful refusal to deal/attempt to monopolize | Monopolists may choose with whom to deal; only narrow exceptions make refusal illegal; plaintiff must plead monopoly or dangerous probability of monopoly | Section 2 claim fails: plaintiff did not plausibly allege actual or threatened monopoly power; dismissal affirmed |
| Geographic market definition | Sharif proposes nationwide, Chicago metro, or a five‑block area | Nationwide/metro plausible but no market power alleged; five‑block market implausibly small | Five‑block market implausible; no plausible market where defendants had monopoly power |
| Product market definition | Retail prescription drugs (cluster) | Too many heterogeneous drugs; market definition inadequate | Cluster market concept can be plausible, but Sharif did not plead facts to show market power in any viable product market |
| Leave to amend | Plaintiffs should be given leave to cure pleading defects | Defects are fundamental; further amendment would be futile | Dismissals of federal antitrust claims with prejudice upheld as amendment would be futile |
Key Cases Cited
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (bars indirect purchaser damage claims)
- Apple Inc. v. Pepper, 139 S. Ct. 1514 (2019) (applies Illinois Brick principles to Section 2 claims)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard requiring plausible claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (applies Twombly plausibility standard)
- Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (rule of reason versus per se analysis)
- Pacific Bell Tel. Co. v. Linkline Commc'ns, Inc., 555 U.S. 438 (2009) (monopolist’s right to choose trading partners; limited refusal‑to‑deal exceptions)
- Verizon Commc'ns Inc. v. Law Offs. of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) (narrow scope of Section 2 refusal‑to‑deal liability)
- Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985) (refusal to deal can be illegal in limited circumstances)
- Brown Shoe Co. v. United States, 370 U.S. 294 (1962) (geographic market must reflect commercial realities)
- United States v. E.I. Du Pont de Nemours & Co., 351 U.S. 377 (1956) (product market definition principles)
- Advocate Health Care Network v. Stapleton, 841 F.3d 460 (7th Cir. 2016) (recognizing bundled/cluster product markets)
- Runnion v. Girl Scouts of Greater Chicago & Nw. Ind., 786 F.3d 510 (7th Cir. 2015) (leave to amend after Rule 12(b)(6) dismissal)