310 F. Supp. 3d 346
E.D.N.Y2018Background
- SourceOne, a dental-supplies marketplace partner with state dental associations, sued distributors Patterson and Benco (and initially Henry Schein) under § 1 of the Sherman Act, alleging a group boycott and pressure on manufacturers and at least one dentist to refuse to deal with SourceOne; Schein later settled.
- Key alleged conduct: coordinated withdrawals from the Texas Dental Association (TDA) 2014 and Arizona Dental Association (AZDA) 2015 conventions, frequent inter-firm communications (emails, texts, calls, one in-person meeting), and outreach to manufacturers and a distributor (Arnold) to discourage support for SourceOne.
- Evidence shows contemporaneous communications among competitors about attendance decisions, managers asking whether rivals would attend, and explicit statements advocating unified boycotts and pressuring manufacturers and a dentist (Josh Austin) to stop supporting SourceOne.
- Market context: concentrated distribution market (Patterson and Schein ~35% each, Benco ~10%), high barriers to entry, and importance of association conventions for sales/visibility—supporting a common motive to exclude a new competitor.
- Procedural posture: defendants moved for summary judgment on federal Sherman Act claims, a rule-of-reason information-sharing theory, damages, state statutory antitrust claims (New York and Arizona), and state common-law claims (tortious interference, civil conspiracy, aiding-and-abetting).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants engaged in a §1 conspiracy (group boycott) to exclude SourceOne | Evidence of parallel withdrawals from TDA/AZDA, extensive inter-firm communications, actions against apparent individual self-interest, market structure = conspiracy in light of plus factors | Parallel conduct explained by independent business reasons (avoid funding a competitor at conventions) and timing differences (Patterson announced earlier) | Denied summary judgment — jury could infer conspiracy from parallel action + plus factors (communications, contrary self-interest, motive) |
| Whether defendants violated §1 by agreeing to exchange competitively sensitive information (rule of reason) | Defendants exchanged material plans about attendance/pressure that, given market concentration and importance of conventions, could harm competition | Information exchanged was not the kind typically anticompetitive (e.g., prices) and insufficient as a matter of law | Denied summary judgment — plaintiff met its initial burden; a jury could find information-sharing produced anticompetitive effects |
| Whether SourceOne can prove damages (expert model admissibility / causation) | Expert model separates damages from each alleged action; even without expert, damages can be proven via fact testimony | Expert model fails to apportion damages to distinct alleged wrongful acts, so damages claim should be dismissed | Denied summary judgment — genuine dispute about damages persists and plaintiff could prove damages through other evidence if expert excluded |
| State common-law claims: tortious interference, civil conspiracy, aiding-and-abetting | Interference and conspiracy flow from the same facts showing antitrust violations; aiding-and-abetting also alleged | Defendants argue lack of underlying tort or that some state laws won't recognize aiding-and-abetting here | Tortious-interference and civil-conspiracy: summary judgment denied under New York law. Aiding-and-abetting: summary judgment granted because Texas law (chosen for conduct-regulating rule) likely would not recognize the claim in this context |
Key Cases Cited
- Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752 (conspiracy requires conscious commitment to common scheme)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (circumstantial proof must tend to exclude independent action)
- Apple, Inc. v. Pepper, 791 F.3d 290 (2d Cir.) (parallel action alone insufficient; need plus factors)
- Apex Oil Co. v. DiMauro, 822 F.2d 246 (2d Cir.) (plus-factors framework and analysis of ambiguous parallel conduct)
- In re Publ'n Paper Antitrust Litig., 690 F.3d 51 (2d Cir.) (assessing conspiracy from totality of evidence)
- Anderson News, L.L.C. v. Am. Media, Inc., 680 F.3d 162 (2d Cir.) (concerted conduct can make lawful unilateral action unlawful)
- Capital Imaging Assocs., P.C. v. Mohawk Valley Med. Assocs., Inc., 996 F.2d 537 (2d Cir.) (group boycott as per se §1 violation)
- U.S. v. U.S. Gypsum Co., 438 U.S. 422 (information exchange analyzed under rule of reason; industry structure and nature of information matter)
- Am. Express Co. v. Italian Colors Restaurant, 838 F.3d 179 (2d Cir.) (market power as surrogate for anticompetitive effects in rule-of-reason analysis)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (parallel conduct consistent with independent action; pleading standard and concepts cited for context)
- Guard-Life Corp. v. S. Parker Hardware Mfg. Corp., 50 N.Y.2d 183 (N.Y. 1980) (unlawful restraint of trade can support tortious interference)
- Carvel Corp. v. Noonan, 350 F.3d 6 (2d Cir.) (elements for tortious interference under New York law)