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Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

tion about his case from the state court year statute of limitations. I therefore
without a response); Coleman, 2003 WL dismiss his motion as untimely.
1888840, at *4–5 (petitioner engaged in a ENTER ORDER.
lengthy correspondence with court in
which he was provided false information);
Willhite, 241 F.Supp.2d at 888 (state ap-
pellate court never informed petitioner it ,
had denied his request for rehearing, so he
had no reason to know he needed to fur-
ther pursue his claim); Wesley, 2001 WL
1155260, at *5 (court did not inform peti- OMNICARE, INC., Plaintiff,
tioner it had dismissed his petition). v.
Here, Bahena’s counsel was at fault for UNITEDHEALTH GROUP, INC., Paci-
any delay in giving information to Bahena. ficare Health Systems, Inc., and RxSo-
Bahena did ultimately contact the court lutions, Inc. d/b/a Prescription Solu-
clerk himself, but there is no evidence or tions, Defendants.
even an allegation that the clerk delayed in
No. 06 C 6235.
providing him the information he request-
ed. Unfortunately, as discussed above, United States District Court,
Bahena is responsible for the errors of his N.D. Illinois,
counsel. Johnson, 265 F.3d at 566.6 Fur- Eastern Division.
ther, although Bahena has presented evi-
Sept. 28, 2007.
dence that he has some medical problems,
he has not presented any evidence, or even Background: Institutional pharmacy
concrete argument, demonstrating that brought claim against managed care
companies and prescription drug provider
those problems prevented him from timely
alleging merger agreement violated Sher-
filing his § 2255 motion. And, other
man Act and Kentucky Consumer Pro-
courts have concluded that language barri-
tection Act. Defendants moved to dis-
ers and lack of counsel are not cognizable
grounds for equitable tolling. See Cole-
man, 2003 WL 1888840, at *4 (citing Mon- Holdings: The District Court, Rebecca R.
tenegro v. United States, 248 F.3d 585, 594 Pallmeyer, J., held that:
(7th Cir.2001), overruled on other grounds (1) pharmacy’s allegation that merger
by Ashley v. United States, 266 F.3d 671 agreement restricted one defendant’s
(7th Cir.2001)). ability to enter into contracts was
straightforward allegation of explicit
agreement between defendants;
(2) pharmacy’s allegations were sufficient
For these reasons, I find that equitable to suggest that intent of merger agree-
tolling does not apply, and that Bahena’s ment was to suppress price competi-
§ 2255 motion was filed beyond the one tion between the two firms;

6. Even were I to conclude that somehow the around May 6, 2005, Bahena’s § 2255 motion
deadline should be equitably tolled to when was still filed over 15 months later on Octo-
Bahena’s counsel first told him about the de- ber 30, 2006, beyond the one-year statute of
nial of his appeal, which was some time limitations under that calculation as well.

(3) pharmacy’s allegations were sufficient 4. Antitrust and Trade Regulation

to state claim that it suffered antitrust O594
injury; Merger agreement between two man-
(4) pharmacy was direct purchaser; and aged health care companies that had acted
(5) sufficient link existed between conduct as competitors in the purchasing of insti-
of companies and injury to pharmacy. tutional pharmacy services was not con-
Motion denied. spiracy between parent company and its
subsidiary, for purposes of institutional
pharmacy’s Sherman Act claims against
1. Antitrust and Trade Regulation
companies. Sherman Act, § 1, 15
U.S.C.A. § 1.
In order to state claim of violation of
the Sherman Act, plaintiff must plead facts 5. Antitrust and Trade Regulation
plausibly suggesting that five elements are O543
satisfied: (1) defendants must have entered Two legally-separate entities consti-
into a contract, combination or conspiracy, tute a single antitrust entity when, as a
(2) contract, combination or conspiracy practical matter, they have a complete uni-
must have resulted in a unreasonable re- ty of interest so that their general corpo-
straint of trade in the relevant market, (3) rate actions are guided or determined not
plaintiff must have suffered an antitrust by two separate corporate consciences, but
injury, (4) plaintiff must be proper plaintiff one.
to bring a private antitrust enforcement 6. Antitrust and Trade Regulation
action under the Clayton Act, and (5) the O543
restraint of trade must have affected inter-
The key factor to determining wheth-
state commerce. Sherman Act, § 1, 15
er legally separate entities constitute a
U.S.C.A. § 1; Clayton Act, § 4, 15
single antitrust entity is whether there is a
U.S.C.A. § 15.
joining of economic resources that had pre-
2. Antitrust and Trade Regulation viously served different interests.
7. Antitrust and Trade Regulation
Institutional pharmacy’s allegation O972(4)
that two managed care companies entered
Institutional pharmacy’s allegations
into explicit merger agreement which re-
that managed care companies entered into
stricted one company’s ability to enter into
agreement that barred one company from
contracts was straightforward allegation of
entering into any contracts creating liabili-
explicit agreement between companies, as
ties greater than three million dollars
required for pharmacy to state Sherman
without other company’s approval and that
Act claim against companies. Sherman
the two competitors subsequently acted in
Act, § 1, 15 U.S.C.A. § 1.
concert in deciding that one company
3. Antitrust and Trade Regulation would not accept deals unless it was able
O537 to pay a noncompetitive reimbursement
To prove that defendants engaged in rate were sufficient to plausibly suggest
contract, combination or conspiracy, in vio- that pharmacy could prove that intent of
lation of the Sherman Act, a plaintiff must merger agreement between two managed
show that there was either a tacit or ex- care companies was to suppress price com-
press agreement between the defendants. petition between the two firms, as required
Sherman Act, § 1, 15 U.S.C.A. § 1. to state claim that companies violated
Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

Sherman Act. Sherman Act, § 1, 15 trust injury in violation of the Sherman

U.S.C.A. § 1. Act. Sherman Act, § 1, 15 U.S.C.A. § 1.
8. Antitrust and Trade Regulation 13. Antitrust and Trade Regulation
O534, 535 O963(1, 2)
Some allegedly anticompetitive prac- Absent a claimed harm to competition,
tices are per se illegal, while others are and an injury traceable to its anticompeti-
analyzed pursuant to a rule of reason. tive effects, no antitrust case can proceed.
9. Antitrust and Trade Regulation 14. Antitrust and Trade Regulation
O534, 535 O967
A practice with strong enough anti- Institutional pharmacy was direct pur-
competitive tendencies to be labeled a per chaser of goods from managed care com-
se violation is treated as such without ref- panies, as required to find pharmacy prop-
erence to its competitive effects in particu- er plaintiff to bring antitrust claim against
lar cases, whereas a plaintiff who wishes to managed care companies alleging merger
prove a violation using the rule of reason agreement violated Sherman Act; pharma-
must prove specific anti-competitive ef- cy contracted directly with one company
fects, which first requires a showing of with no intervening middlemen. Sherman
market power. Act, § 1, 15 U.S.C.A. § 1; Clayton Act,
10. Antitrust and Trade Regulation § 4, 15 U.S.C.A. § 15.
15. Antitrust and Trade Regulation
When an agreement between competi-
tors is entered into for the purpose of
Sufficient link existed between con-
restraining price competition, and actually
duct of managed care companies and inju-
does restrain or contribute to the restraint
ry to institutional pharmacy such that per-
of such competition, such an agreement
mitting pharmacy to sue would vindicate
constitutes price fixing, which is a per se
purposes of Clayton Act, as required to
unreasonable practice under the Sherman
find institutional pharmacy was proper
Act. Sherman Act, § 1, 15 U.S.C.A. § 1.
plaintiff to bring antitrust claim against
11. Antitrust and Trade Regulation managed care companies alleging merger
O972(5) agreement violated Sherman Act; there
In a buyers’ conspiracy case, a seller was causal connection between alleged vio-
sufficiently alleges antitrust injury by lation and alleged injury, pharmacy alleged
pleading that it has received excessively improper motive, injury was type Con-
low prices from members of the buyers’ gress sought to address, damages were not
cartel. speculative, and companies failed to allege
12. Antitrust and Trade Regulation risk of duplicate recovery of complex dam-
O972(5) age apportionment. Sherman Act, § 1, 15
U.S.C.A. § 1; Clayton Act, § 4, 15
Institutional pharmacy’s allegations
U.S.C.A. § 15.
that managed care companies were mem-
bers of per se unlawful buyers’ conspiracy,
and that pharmacy received significantly
below-market reimbursement rate as a re-
sult of this conspiracy were sufficient to Aldo A. Badini, Brian S. McGrath,
state claim that pharmacy suffered anti- George E. Mastoris, Harvey Kurzweil, Mi-

chael C. Thelen, Susannah P. Torpey, cies in restraint of trade, 15 U.S.C. § 1

Dewey & LeBoeuf LLP, John D. Hark- (2000) (‘‘Count I’’), as well as a parallel
rider, Axinn, Veltrop & Harkrider LLP, prohibition against antitrust conspiracies
New York City, Andrew Jonathon Schaef- in the Kentucky Consumer Protection Act,
fer, Carrie A. Shufflebarger, William T. Ky.Rev.Stat. Ann. § 367.175 (West 2006)
Robinson, III, Greenebaum, Doll & Mc- (‘‘Count II’’). Omnicare also charged De-
Donald, Covington, KY, James T. Malys- fendants with two state-law counts of
iak, Lee A. Freeman, Jr., Richard P. fraud, and one state-law count of conspira-
Campbell, Jenner & Block LLP, Chicago, cy to commit fraud. Defendants now
IL, for Plaintiff. move collectively to dismiss Counts I and
Athanasios Papadopoulos, James King II. For the reasons stated below, this mo-
Gardner, Neal, Gerber & Eisenberg, Chi- tion is denied.2
cago, IL, Bethany Dianne Krueger, Byron
Todd Jones, Christopher W. Madel, Jenni-
fer G. Daugherty, Margaret M. Lockner, FACTS
Michael V. Ciresi, Sara A. Poulos, Stephen The following facts are drawn from Om-
P. Safranski, Thomas J. Undlin, Robins, nicare’s Amended Complaint, and are re-
Kaplan, Miller & Ciresi LLP, Minneapolis, counted in the light most favorable to Om-
MN, Frederick M. Erny, Mark Alan Van-
der Laan, Dinsmore & Shohl, LLP, Cincin-
nati, OH, for Defendants. Omnicare is an institutional pharmacy;
it provides drugs and services to long-term
MEMORANDUM OPINION care facilities. (Am.Compl.¶¶ 2, 21.) Its
AND ORDER business includes providing services tai-
REBECCA R. PALLMEYER, District lored to the needs of a frail and elderly
Judge. population, some of whom pay for their
Plaintiff Omnicare Inc. (‘‘Omnicare’’) care through the Medicare Part D subsi-
filed a five-count complaint against Defen- dized drug program. (Id. ¶¶ 21–22, 26.)
dants UnitedHealth Group, Inc. (‘‘United- In order to serve Part D enrollees, Omni-
Health’’), PacifiCare Health Systems, Inc.1 care must negotiate deals with Prescrip-
(‘‘PacifiCare’’), and RxSolutions, Inc. d/b/a tion Drug Providers (‘‘PDPs’’), who receive
Prescription Solutions (‘‘RxSolutions’’) (col- premiums from the enrollees as well as
lectively, ‘‘Defendants’’). Omnicare’s First federal subsidies, and then reimburse in-
Supplemental and Amended Complaint stitutional pharmacies such as Omnicare
(the ‘‘Amended Complaint’’) alleged that when those pharmacies provide drugs and
Defendants had violated the Sherman services to the enrollees. (Id. ¶¶ 22, 26–
Act’s prohibition on contracts or conspira- 27.)

1. Defendants have informed the court that Counts I and II of Plaintiff’s First Supplemen-
PacifiCare has previously been captioned in- tal and Amended Complaint will be cited as
correctly as ‘‘PacifiCare Health Systems, ‘‘Mot. to Dismiss.’’ Defendants’ Memoran-
Inc.,’’ when it is in fact an LLC. (Mot. to dum in Support of Defendants’ Motion to
Dismiss 1.) Absent a stipulation correcting the Dismiss will be cited as ‘‘Defs.’ Mem.’’ Omni-
record, the court will expect PacifiCare to care’s Memorandum of Law in Opposition to
move for a substitution. Defendants’ Motion to Dismiss Plaintiff’s ‘‘An-
titrust Claims’’ will be cited as ‘‘Pl.’s Mem.’’
2. In this opinion, the First Supplemental and Finally, Defendants’ Reply Brief in Support of
Amended Complaint will be cited as ‘‘Am. Defendants’ Motion to Dismiss will be cited as
Compl.’’ Defendant’s Motion to Dismiss ‘‘Defs.’ Reply.’’
Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

Medicare Part D was designed, in part, agreement with Omnicare in which United-
to incorporate competition among PDPs Health would act as a PDP, with Omnicare
for enrollees to their plans. (Id. ¶ 28.) agreeing to accept reimbursement from
PDPs do compete for enrollees through UnitedHealth for providing pharmacy ser-
the quality and quantity of the services vices to UnitedHealth’s enrollees. (Id.
they include. (Id. ¶ 29.) Thus, in effect, ¶ 33.) By June of 2006, when the Amend-
the relationship between PDPs and institu- ed Complaint was filed, UnitedHealth op-
tional pharmacies is that of a buyer and erated in all fifty states, holding a domi-
seller; PDPs pay firms like Omnicare to nant position in many parts of the country.
provide pharmacy services for their enroll- (Id. ¶ 23.) UnitedHealth covered about
ees, with better packages of services being
27% of all nationwide Part D enrollees,
exchanged for higher reimbursement
and in some regions, it covered in excess of
rates. (Id. ¶¶ 27–28.) PDPs also, howev-
40% of all Part D enrollees.3 (Id.)
er, generally have an incentive to provide
services to the enrollees at the lowest pos- In July of 2005, Defendant PacifiCare
sible cost, and to avoid any increases in the was an independent managed care compa-
quantity of services covered by their plans. ny, providing health insurance to three
(Id. ¶ 27.) million health plan members and ten mil-
The Centers for Medicare and Medicaid lion prescription drug and other specialty
Services (‘‘CMMS’’), is a component of the plan members nationwide. (Id. ¶ 24.) In
United States Department of Health and July of 2005, PacifiCare entered into a
Human Services responsible for the rollout merger agreement with UnitedHealth.
of Medicare Part D, CMMS evaluated the (Id. ¶ 36.) After UnitedHealth and Pacifi-
applications of the prospective PDPs, and Care obtained a consent agreement from
certified the successful bidders to become the Department of Justice’s Antitrust Divi-
the first PDPs in September of 2005. (Id. sion, which had objected to the combina-
¶¶ 2, 30.) CMMS regulations required tion of the two competitors at a prior
PDPs to assemble a network of pharma- unspecified time, this merger was execut-
cies, including institutional pharmacies ed, and PacifiCare became a wholly-owned
such as Omnicare that could provide ser- subsidiary of UnitedHealth in December of
vices to long term care facilities. (Id. 2005. (Id. ¶ 24, 39.)
¶ 31.) The window in which PDPs could
negotiate the provision of such services by Defendant RxSolutions is a wholly-
pharmacies was only ‘‘a few short months,’’ owned subsidiary of PacifiCare and Uni-
presumably only until the PDPs started tedHealth. (Id. ¶ 25.) It provides phar-
functioning as payors on January 1, 2006, macy benefits management services to
although this is unclear from the Amended PacifiCare and other managed care organ-
Complaint. (Id. ¶¶ 30–31.) izations. (Id.) Its role in this litigation is
In July of 2005, Defendant United- somewhat unclear, but it has filed no mo-
Health was a major managed care and tions separately from the other two De-
health insurance company. (Id. ¶ 23.) In fendants, and indeed, all parties to this
July of 2005, UnitedHealth entered into an litigation refer to it and PacifiCare collec-

3. Although this fact was not alleged in the group. Amy Merrick, Getting an ‘A’ in Part
complaint, the court notes that UnitedHealth, D—While Others Complained, Walgreen Found
as of June 2006, was the largest of all the Way to Profit From Drug Plan for Seniors,
PDPs, thanks in part to a plan endorsement Wall St. J., June 21, 2006, at B1.
by the AARP, a powerful seniors lobbying

tively as a single entity throughout their from Omnicare. (Id. ¶ 45.) There was
pleadings. (E.g., id. at 1; Defs.’ Mem. 1.) thus no risk that, if the hardball tactic fell
Until the merger was completed, Uni- through, PacifiCare’s enrollees would lack
tedHealth and PacifiCare were competi- access to Omnicare’s services.
tors in the market for purchase of institu- On or about November 8, 2005, the
tional pharmacy services in their role as CMMS advised that ‘‘it is imperative that
future PDPs. (Id. ¶¶ 43–44.) During this [long-term care] pharmacies not withhold
time, Omnicare was seeking to provide contracts with Part D plans to limit the
institutional pharmacy services for Pacifi- number of plans to which a facility’s bene-
Care’s enrollees. (Id. ¶ 42.) As part of ficiaries have access.’’ (Id. ¶ 53.) On De-
the merger agreement between United- cember 6, 2005, Omnicare, at the urging of
Health and PacifiCare, PacifiCare was re- the CMMS and in order to prevent any
quired to obtain UnitedHealth’s consent disruption of services to its PacifiCare plan
before entering into any Part D agreement enrollees, accepted PacifiCare’s offer. (Id.
with Omnicare. (Am.Compl.¶ 37.) One ¶ 54.) Omnicare was thus compelled to
provision of the merger agreement prohib-
accept a below-market reimbursement rate
ited PacifiCare, from the time the merger
for PacifiCare patients. (Id. ¶ 55.) In
agreement was executed until the merger
February of 2006, UnitedHealth, now the
was completed, from entering into ‘‘any
owner of PacifiCare, notified Omnicare
Contract TTT that involves the Company or
that it was withdrawing the UnitedHealth
any of its Subsidiaries incurring a liability
plans from its original agreement with
in excess of three million dollars ($3,000,-
Omnicare, and then switched them to the
000) individually or seven million five hun-
PacifiCare plan, with its lower reimburse-
dred thousand dollars ($7,500,000) in the
ment rate. (Id. ¶ 60.)
aggregate’’ without the prior consent of
UnitedHealth. (Id.) In its Amended Complaint, Omnicare
On July 14, 2005, one week after accept- claims that the collusion between United-
ing UnitedHealth’s merger offer, but about Health and PacifiCare constituted a viola-
five months before the merger was com- tion of the Sherman Act, as a per se illegal
plete, PacifiCare informed Omnicare that scheme to fix prices. (Id. ¶¶ 70–72.) Om-
it would not be willing to negotiate the nicare also claims that the same conduct
terms of a contract with Omnicare. violated the Kentucky Consumer Protec-
(Id.¶¶ 24, 42.) Instead, PacifiCare de- tion Act. (Id. ¶¶ 79–83.) Defendants have
manded that Omnicare must accept a non- moved collectively to dismiss both of these
competitive reimbursement rate and offer Counts, on the ground that they fail to
no more than the statutory minimum pack- state a claim on which relief can be grant-
age of services in order to do business with ed. (Defs.’ Mem. 1.)
PacifiCare. (Id. ¶¶ 42, 46.) Omnicare al-
leges that PacifiCare made this demand DISCUSSION
only after consulting with PacifiCare’s In considering a motion to dismiss, the
competitor, UnitedHealth. (Id. ¶ 43.) Pa- court tests the sufficiency of the complaint;
cifiCare and UnitedHealth were allegedly it does not decide the merits. Gibson v.
willing to take the risk that Omnicare City of Chicago, 910 F.2d 1510, 1520 (7th
might refuse this demand because it would Cir.1990). This involves two ‘‘easy-to-clear
be possible, after the merger, to fold Paci- hurdles’’: the plaintiff must plead suffi-
fiCare’s plans into the coverage agreement cient facts to give fair notice of the claim
that UnitedHealth had already obtained and the grounds upon which it rests, and
Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

those facts, if true, must plausibly suggest 2006). Fourth, Omnicare must be a prop-
that the plaintiff is entitled to relief, ‘‘rais- er plaintiff to bring a private antitrust
ing that possibility above a speculative lev- enforcement action under section 4 of the
el.’’ EEOC v. Concentra Health Serv., Clayton Act, 15 U.S.C. § 15. Loeb Indus.,
Inc., 496 F.3d 773, 776 (7th Cir.2007) (in- Inc. v. Sumitomo Corp., 306 F.3d 469, 481
ternal punctuation omitted); see Bell At- (7th Cir.2002). Finally, the restraint of
lantic v. Twombly, ––– U.S. ––––, 127 trade must have affected interstate com-
S.Ct. 1955, 1964–65, 1973 n. 14, 167 merce. Hammes v. AAMCO Transmis-
L.Ed.2d 929 (2007). On a motion to dis- sions, Inc., 33 F.3d 774, 778–779 (7th Cir.
miss, the court treats all well-pleaded alle- 1994). Defendants assert that Omnicare
gations in the complaint as true, and has failed to adequately plead the first
grants all reasonable inferences in the four of these elements, so the court will
plaintiff’s favor. McMillan v. Collection consider each one in turn.4
Prof’ls, Inc., 455 F.3d 754, 758 (7th Cir.
2006); see Bell Atlantic, 127 S.Ct. at 1965 1. Contract, Combination, or Conspir-
(requiring plausible grounds for inferences acy
if those inferences are to sustain a com-
[3] In order to state a claim of a sec-
tion 1 violation, Omnicare must prove that
A. Count I: Antitrust Conspiracy Un- Defendants engaged in a ‘‘contract, combi-
der the Sherman Act nation, or conspiracy.’’ Bell Atlantic, 127
S.Ct. at 1964. To prove this element,
[1, 2] Omnicare alleges that Defen-
Omnicare must show that there was ei-
dants have engaged in a ‘‘contract, combi-
ther a tacit or express agreement between
nation or conspiracy in restraint of trade
the Defendants. Id. This test is easily
in interstate commerce’’ in violation of sec-
met here: Omnicare has alleged that Uni-
tion 1 of the Sherman Act, 15 U.S.C. § 1.
tedHealth and PacifiCare entered into an
A survey of the Seventh Circuit’s cases
explicit merger agreement which restrict-
reveals that, in order to state a claim of a
ed PacifiCare’s ability to enter into con-
section 1 violation, Omnicare must plead
tracts. (Am.Compl.¶¶ 36–37.) After en-
facts plausibly suggesting that five ele-
tering this agreement, but before the
ments are satisfied. First, Defendants
merger was complete, UnitedHealth and
must have entered into a contract, combi-
PacifiCare allegedly coordinated their de-
nation or conspiracy. Bell Atlantic, 127
cisions regarding PacifiCare’s entry into
S.Ct. at 1964; Denny’s Marina, Inc. v.
Renfro Prods., Inc., 8 F.3d 1217, 1220 (7th new agreements. (Id. ¶¶ 24, 43.) This is
Cir.1993). Second, the contract, combina- a straightforward allegation of an explicit
tion or conspiracy must have resulted in a agreement between the Defendants, satis-
unreasonable restraint of trade in the rele- fying the first element of a Sherman Act
vant market. Denny’s Marina, 8 F.3d at section 1 claim.
1220. Third, Omnicare must have suffered The court notes that Bell Atlantic,
an antitrust injury. Tri–Gen Inc. v. Int’l which was decided after the briefing in this
Union of Operating Eng’rs, Local 150, case had been completed, worked an im-
AFL–CIO, 433 F.3d 1024, 1031 (7th Cir. portant alteration in the law of civil plead-

4. As to the fifth element, all that is needed to state commerce. Hammes, 33 F.3d at 778–
plead an effect on interstate commerce is a 79. Omnicare has alleged that the Defen-
conclusory statement, because nowadays dants’ anticompetitive activities affected inter-
nearly all antitrust offenses will affect inter- state commerce. (Am.Compl.¶ 20.)

ing, especially as to antitrust claims. Bell and registry, and its regional affiliates,
Atlantic, 127 S.Ct. at 1964–65; EEOC, 496 constituted a single antitrust entity, and
F.3d 773, 777. The court does not believe collecting cases). The key factor is wheth-
that Bell Atlantic alters the analysis on er there is a ‘‘joining of economic re-
this issue. Bell Atlantic holds that a sources that had previously served differ-
plaintiff must plead more than a bare alle- ent interests.’’ Copperweld, 467 U.S. at
gation of conspiracy, coupled with an alle- 771, 104 S.Ct. 2731. Here, the merger
gation of parallel conduct and implausible agreement took two separate firms that
allegations of motive, in order to survive a had acted as competitors in the purchasing
motion to dismiss. 127 S.Ct. at 1970–73. of institutional pharmacy services (Am.
Here, Omnicare has pleaded an outright
Compl.¶ 24) and allegedly enabled them to
agreement, with enough specific facts, in-
coordinate their decisionmaking. This is
cluding quotations from the agreement it-
logically very different from the alleged
self, to render the allegation of agreement
‘‘conspiracy’’ between a parent company
plausible. Nevertheless, given the novelty
and its subsidiary in Copperweld, where no
of this issue, the court’s decision will be
made without prejudice to a limited addi- independent activity could possibly be lost.
tional briefing on the question of whether Defendants do not cite any binding au-
Bell Atlantic should be interpreted differ- thority that would require dismissal on
ently in its application to the facts of this this basis, and this court has not been able
case. to locate any. The one Eighth Circuit case
[4–6] Defendants, however, argue that they cite, International Travel Arrangers
Omnicare’s ‘‘contract, combination or con- v. NWA, Inc., 991 F.2d 1389 (8th Cir.1993),
spiracy’’ allegation fails as a matter of law, merely stands for the proposition that it
because after the Defendants entered into would be possible for a jury to find that a
a merger agreement, they became a single merger agreement, as a factual matter,
entity for antitrust purposes. (Defs.’ had so combined two organizations that
Mem. 13–15.) Two legally-separate enti- they had no separate mind, after the
ties constitute a single antitrust entity agreement had been made. Id. at 1397–
when, as a practical matter, they have ‘‘a 98. This is logically and factually distinct
complete unity of interest’’ so that ‘‘their from Omnicare’s argument, which is that
general corporate actions are guided or the decision to enter into a merger agree-
determined not by two separate corporate ment on certain terms was itself an unlaw-
consciousnesses, but one.’’ See Copper- ful agreement. See Chicago Prof’l Sports
weld Corp. v. Indep. Tube Corp., 467 U.S. Ltd. P’ship v. NBA, 961 F.2d 667, 674 (7th
752, 771, 104 S.Ct. 2731, 81 L.Ed.2d 628 Cir.1992) (stating that ‘‘[a]greements limit-
(1984). Examples of such unities of inter- ing to whom, and how much, a firm may
est include the relationship between a par- sell are the defining characteristics of car-
ent corporation and a wholly-owned sub-
tels’’ and thus cannot justify a reduction of
sidiary, id., as well as, in some instances,
relationships between sister corporations
with a common owner, principals and Furthermore, even if it were appropri-
agents, franchisers and franchisees, patent ate to analyze the question of separate
holders and licensees, and the members of identity only after Defendants had entered
rural cooperatives. See Jack Russell Ter- into the merger agreement, dismissal on
rier Network of N. Cal v. Am. Kennel this ground would still be inappropriate.
Club, Inc., 407 F.3d 1027, 1034–35 (9th After all, although it might be possible, on
Cir.2005) (holding that national breed club some set of facts, to find that two corpora-
Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

tions planning a merger had lost indepen- (7th Cir.2002) (describing the market pow-
dent economic identity, it is also possible er requirement). Defendants state that the
that they have not. It is at least plausible rule of reason is applicable to their claim,
that two competitor corporations that are but then note that they are assuming,
going through a process of merger contin- ‘‘[f]or the purposes of this Motion only,’’
ue to retain separate economic interests. that Omnicare has sufficiently pleaded a
In fact, the merging entities have a unity per se violation. (Defs.’ Reply 2 n. 1.)
of interests only to the extent that the Thus, it is effectively conceded that Omni-
merger goes according to plan and re- care has pleaded an adequate claim of a
mains in the interests of both companies. per se violation. Nevertheless, as the is-
For this reason, scholars have argued that
sue is an important one, this court will
firms should be treated as separate actors
briefly assess which rule is more appropri-
until a merger is fully consummated, and
ately applied to Omnicare’s claim.
have criticized the holding of NWA. See
Phillip E. Areeda and Herbert Hoven- [10] When an agreement between com-
kamp, Antitrust Law: An Analysis of An- petitors is entered into for the purpose of
titrust Principles and Their Application restraining price competition, and actually
¶ 1464h & n. 39 (2d ed.2003). does restrain or contribute to the restraint
The court concludes that Omnicare has of such competition, such an agreement
pleaded facts which plausibly suggest that constitutes price fixing, which is a per se
the merger agreement constituted a con- unreasonable practice under section 1 of
tract, combination, or conspiracy between the Sherman Act. See Tri–Gen, 433 F.3d
UnitedHealth and PacifiCare under sec- at 1033; Denny’s Marina, 8 F.3d at 1221.
tion 1 of the Sherman Act. In this case, Omnicare alleges that the
UnitedHealth and PacifiCare entered into
2. Unreasonable Restraint of Trade
an agreement that barred PacifiCare from
[7–9] Next, Omnicare must establish entering into any contracts creating liabili-
that the merger agreement was an unrea- ties greater than three million dollars
sonable restraint of trade in a relevant without UnitedHealth’s approval. (Am.
market. Denny’s Marina, 8 F.3d at 1220.
Compl.¶ 37.) It is plausible that such an
The first step in this analysis is an inquiry
agreement would necessarily restrain price
into what rule the court should apply;
competition between two competitors; Pa-
some allegedly anticompetitive practices
cifiCare could not offer higher prices in an
are per se illegal, while others are ana-
attempt to draw customers away from Un-
lyzed pursuant to a rule of reason. See
itedHealth, and UnitedHealth would have
Tri–Gen, 433 F.3d at 1032; Denny’s Mari-
na, 8 F.3d at 1220. The difference is no need to offer higher prices when it
important; a practice with strong enough could control PacifiCare’s ability to outbid
anti-competitive tendencies to be labeled a it. Furthermore, given the rather bluntly
per se violation is treated as such without anticompetitive nature of such an agree-
reference to its competitive effects in par- ment, and given Omnicare’s allegations
ticular cases, see Tri–Gen, 433 F.3d at that the two competitors subsequently act-
1032, whereas a plaintiff who wishes to ed in concert in deciding the PacifiCare
prove a violation using the rule of reason would not accept deals unless it was able
must prove specific anti-competitive ef- to pay a noncompetitive reimbursement
fects, which first requires a showing of rate (Am.Compl.¶¶ 42–44, 55), it can plau-
market power. See 42nd Parallel North sibly be inferred that the intent of the
v. E St. Denim Co., 286 F.3d 401, 404–05 agreement was to suppress price competi-

tion between the two firms. Whether or members of a per se unlawful buyers’ con-
not Omnicare can ultimately prove that the spiracy, and that it received a significantly
merger agreement was so motivated, it has below-market reimbursement rate as a re-
pleaded sufficient facts to plausibly sug- sult of this conspiracy. (Am.Compl.¶¶ 36–
gest that it can do so after discovery, 38, 54–55.) Thus, it has adequately al-
which is all that is necessary at this stage. leged that it suffered antitrust injury.
Bell Atlantic, 127 S.Ct. at 1964.
Defendants devote most of their two
memoranda to arguing that this element is
3. Antitrust Injury
not satisfied. They make four identifiable
[11, 12] Next, Omnicare must demon-
arguments to this effect. First, they ar-
strate that it has suffered an antitrust
gue that, as a matter of law, there can be
injury; that is, an injury that arises from
no antitrust injury in the absence of either
the anticompetitive nature of the charged
raised prices or reduced output to consum-
unlawful practice. Tri–Gen Inc., 433 F.3d
ers. (Defs.’ Mem. 8; Defs.’ Reply 4.) In
at 1031. In a buyers’ conspiracy case, a
support, Defendants marshal dicta from
seller sufficiently alleges antitrust injury
numerous cases that seem to support this
by pleading that it has received excessively
claim. See, e.g., James Cape & Sons Co. v.
low prices from members of the buyers’
PCC Constr. Co., 453 F.3d 396, 399 (7th
cartel. Int’l Outsourcing Servs., LLC, v.
Blistex, Inc., 420 F.Supp.2d 860, 865 Cir.2006) (stating that antitrust injury
(N.D.Ill.2006) (Bucklo, J.); Bellevue Drug ‘‘must involve loss that comes from acts
Co. v. Advance PCS, No. Civ.A. 03–4731, that reduce output or raise prices to con-
2004 WL 724490, at *4 (E.D.Pa. Mar. 2, sumers’’) (internal citations and punctua-
2004); Areeda & Hovenkamp, supra, tion omitted). The authorities cited by the
¶ 350b. This is because a buyers’ cartel is Defendants, however, do not satisfy the
the mirror image of a sellers’ cartel; the court that this reasoning remains valid in a
harm caused is not artificially raised prices buyers’ cartel case.
for consumers, but rather artificially low- Many of the cases cited by the Defen-
ered prices for sellers. See Vogel v. Am. dants are the more traditional sellers’ con-
Soc’y of Appraisers, 744 F.2d 598, 601 (7th spiracy cases, in which there would be no
Cir.1984) (noting that monopoly and mon- reason to consider the proper rule in a
opsony are symmetrical distortions of com- buyers’ case. See U.S. Gypsum Co. v. Ind.
petition from an economic standpoint). Gas Co., 350 F.3d 623, 625 (7th Cir.2003)
For this reason, both the Seventh Circuit (buyer of natural gas sued a seller of natu-
and the Supreme Court have upheld claims ral gas for allegedly inflating market
by sellers who purchased goods at artifi- prices); NBA, 961 F.2d at 669 (suit by
cially lowered prices because of buyers’
television station and a basketball team
cartels, albeit without any specific discus-
that received royalties from that station
sion of antitrust injury. See, e.g., Mande-
against the NBA, as a seller of the rights
ville Island Farms v. Am. Crystal Sugar
to televise basketball games); Cathedral
Co., 334 U.S. 219, 235–36, 68 S.Ct. 996, 92
Trading, LLC v. Chicago Bd. Options
L.Ed. 1328 (1948); Sanner v. Bd. of Trade
Exch., 199 F.Supp.2d 851, 859 (N.D.Ill.
of the City of Chicago, 62 F.3d 918, 927–28
(7th Cir.1995) (conspiracy to depress soy- 2002) (suit by purchasers of options
bean prices, intended to benefit soybean against seller of options).
buyers, created cause of action in soybean In another group of cases cited for this
sellers). Omnicare has successful alleged proposition, firms sue their competitors
that UnitedHealth and PacifiCare were within a market; those cases, too, are in-
Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

apposite. See Atlantic Richfield Co. v. Dicta in these discussions therefore carries
USA Petroleum Co., 495 U.S. 328, 331, 110 little weight when compared with the opin-
S.Ct. 1884, 109 L.Ed.2d 333 (1990) (firm ion of courts and authorities that have
suing a competitor); James Cape & Sons, directly addressed this question and con-
453 F.3d at 399–400 (suit by one bidder cluded that a seller is injured when buyers
against competing bidders); Tri–Gen, 433 collude to lower prices. Blistex, 420
F.3d at 1027, 1030 (suit by drilling compa- F.Supp.2d at 865; Bellevue Drug, 2004
ny against union that was allegedly con- WL 724490, at *4; Areeda & Hovenkamp,
spiring with the drilling company’s com- supra, ¶ 350b.
petitors); Serfecz v. Jewel Food Stores, 67
[13] Defendants’ second argument is
F.3d 591, 597, 599 (7th Cir.1995) (suit by
that ordinary business wrongs not tracea-
lessor, alleging that he was injured in his
ble to anticompetitive conduct do not con-
role as a competitor for lessees, and in
other, less direct ways); Israel Travel Ad- stitute antitrust injury. (Defs.’ Mem. 6–8.)
visory Serv., Inc. v. Israel Identity Tours, This proposition is correct; absent a
Inc., 61 F.3d 1250, 1253 (7th Cir.1995) (suit claimed harm to competition, and an injury
by tour company against a rival); Hassan traceable to its anticompetitive effects, no
v. Indep. Practice Assocs., 698 F.Supp. antitrust case can proceed. See U.S. Gyp-
679, 681, 685 (E.D.Mich.1988) (suit by al- sum, 350 F.3d at 626–27. But here, Omni-
lergists against organization of doctors in care has in fact alleged both a harm to
competition with them). competition—the claimed conspiracy be-
tween the Defendants—and an injury aris-
Finally, a third group of cases involves
ing out of that violation—the receipt of
allegations that a firm without market
power refused to hire or purchase services lowered prices for services supplied to Pa-
from a particular individual, without alle- cifiCare. (Am.Compl.¶¶ 36–38, 54–55.)
gations of price fixing or other per se Thus, Defendants’ attempts to characterize
anticompetitive practices by the firm. See Omnicare’s complaint as pleading only ‘‘or-
Kochert v. Greater Lafayette Health dinary business torts’’ fails. (Defs.’ Mem.
Servs., Inc., 463 F.3d 710, 717 (7th Cir. 6.)
2006) (suit by doctor against hospital alleg- Defendants’ third argument is that Om-
ing a failure to renew her contract); Wag- nicare cannot plead antitrust injury with-
ner v. Magellan Health Servs. Inc., 121 out alleging harm to other sellers as well
F.Supp.2d 673, 679–80 (N.D.Ill.2000) (suit as to itself. (Defs.’ Mem. 10; Defs.’ Reply
by doctor against managed care organiza- 8–9.) The cases they cite for this proposi-
tion that refused to refer patients to his tion, however, do not support such a rule.
care and attempted to get others to re- Wagner deals a doctor’s allegations that a
move him from the on-call rotation); Vak- managed care provider conspired with oth-
haria v. Little Co. of Mary Hosp. & ers to deny him patient referrals, and
Health Care Ctrs., 917 F.Supp. 1282, 1301 properly holds that refusing to deal with
(N.D.Ill.1996) (suit by doctor challenging one individual is not a harm to competition,
the staffing decision of a single hospital absent more. 121 F.Supp.2d at 681–82.
without market power). Nowhere does the Wagner court state that
None of these cases addresses, or even the problem with the suit was the failure
discusses, the appropriate rule applicable to allege that other doctors had been treat-
to an allegation by a seller of lowered ed the same way. Id. Wellwoods Develop-
prices because of a per se anticompetitive ment Co. v. City of Aurora is even less
price fixing scheme by a buyers’ cartel. apt; it holds that a plaintiff that is not a

participant in the market where competi- a particular case. Kochert, 463 F.3d at
tion is restrained, and that suffers harm 718 (internal punctuation omitted). This
only in a fairly indirect way, lacks antitrust rule incorporates two components: the di-
standing. 631 F.Supp. 221, 229–30 (N.D.Ill. rect purchaser rule of Illinois Brick Co. v.
1986). All the Seventh Circuit has re- Illinois, 431 U.S. 720, 745–46, 97 S.Ct.
quired is harm to competition and an inju- 2061, 52 L.Ed.2d 707 (1977), and the prox-
ry arising out of the violation, not that a imate cause requirements of Associated
plaintiff demonstrate that others were General Contractors of California, Inc. v.
harmed in the same way, so this argument California State Council of Carpenters,
fails as well. See, e.g., U.S. Gypsum, 350 459 U.S. 519, 545–46, 103 S.Ct. 897, 74
F.3d at 626–27. L.Ed.2d 723 (1983) (‘‘AGC ’’). Sumitomo,
Finally, Defendants argue that there can 306 F.3d at 481. For the reasons ex-
be no antitrust injury in a buyers’ conspir- plained here, Omnicare has adequately al-
acy case where Defendants have not been leged that is a proper plaintiff.
shown to possess market control or to
[14] First, Omnicare has satisfied the
have affected the entire seller’s market.
direct purchaser rule of Illinois Brick. Il-
(Defs.’ Reply 10–11.) Defendants cite no
linois Brick precludes recoveries by plain-
cases that actually assert this proposition;
tiffs who have purchased goods from a
they merely argue that cases cited by Om-
middleman who purchased directly from
nicare involved such facts. (Id.) The mere
an antitrust violator, so long as that mid-
fact that prior cases involved particular
dleman could bring a claim against the
facts does not mean that those facts were
violator representing the entirety of the
necessary to their results, of course. In
plaintiff’s injury. See Sumitomo, 306 F.3d
any event, this argument ignores the prin-
at 481–82. In a buyers’ cartel case, this
ciple that a buyers’ conspiracy to fix
rule would presumably mean that if Com-
prices, which is alleged here, is per se
pany A had sold to Company B, who then
unlawful, so that no proof of market con-
sold to a buyers’ conspiracy, and that con-
trol need be offered. See Mandeville, 334
spiracy meant that both A and B received
U.S. at 235–36, 68 S.Ct. 996; Vogel, 744
F.2d at 601. reduced prices, only Company B could
bring an antitrust claim. See Blistex, 420
Thus, Omnicare has properly pleaded
F.Supp.2d at 865 (noting that, in a buyers’
that it suffered an antitrust injury.
cartel case, it is the most direct seller who
4. Proper Plaintiff is the proper plaintiff under Illinois
Brick ). This is no bar to Omnicare’s suit,
Finally, Omnicare must establish that it
as it alleges that it contracted directly with
is an appropriate plaintiff to bring this
PacifiCare, with no intervening middle-
action for treble damages under section 4
men. (Am.Compl.¶ 54.)
of the Clayton Act, 15 U.S.C. § 15, which
provides for the right of private individu- [15] Next, the court must assess, using
als to enforce the Sherman Act. Although the factors set forth in AGC, whether Om-
the Clayton Act provides that ‘‘any person nicare has alleged a sufficient link between
who shall be injured by reason of any- Defendants’ conduct and its own injury,
thing forbidden in the antitrust laws’’ may such that permitting it to sue will vindicate
bring an action, id., judicial construction the purposes of the Clayton Act. See AGC,
has limited this right to relief to those 459 U.S. at 544–45, 103 S.Ct. 897; Serfecz,
plaintiffs who can ‘‘most effectively vindi- 67 F.3d at 598. Defendants have offered
cate the purposes of the antitrust laws’’ in little argument on this point, aside from an
Cite as 524 F.Supp.2d 1031 (N.D.Ill. 2007)

assertion that prescription drug consum- was restrained. 459 U.S. at 538–39, 103
ers, rather than Omnicare, would be better S.Ct. 897 (noting that the central concern
antitrust enforcers. (Defs.’ Mem. 12–13; of the Sherman Act was protecting the
Defs.’ Reply 8.) Furthermore, neither par- ‘‘economic freedom of participants in the
ty has discussed how this court should relevant market’’). In light of the mirror-
apply the AGC factors to Omnicare’s image nature of sellers’ and buyers’ car-
Amended Complaint. Thus, this court will tels, the court construes this language to
confine itself to a brief discussion of the include an intent to protect sellers who are
factors, paying particular attention to a the victims of a conspiracy by buyers to
comparison between the position of Omni- suppress prices. See Mandeville, 334 U.S.
care and potential drug-consumer plain- at 235–36, 68 S.Ct. 996 (noting that buyers’
tiffs. cartels are condemned by the Sherman
The first AGC factor is the causal con- Act, and that the persons specifically in-
nection between the alleged violation and jured by such cartels are sellers); Vogel,
the alleged injury. Sumitomo, 306 F.3d at 744 F.2d at 601. Thus, this factor also
484. Omnicare’s Amended Complaint favors Omnicare, as the seller, over subse-
characterizes the causal link as quite di- quent consumer-purchasers, who may or
rect; Defendants entered into a collusive may not have suffered any injury at all.
agreement (Am.Compl.¶¶ 36–38), they col- The fifth factor is whether the damages
luded with respect to what contracts Paci- are likely to be speculative. Sumitomo,
fiCare would enter into (id. ¶¶ 43–44), and 306 F.3d at 484. The court finds it likely
as a result, Omnicare was paid lower-than-
that damages will be less speculative for
competitive reimbursement rates.
Omnicare, which can charge the difference
(Id.¶¶ 54–55.) This link is, in the court’s
between a competitive rate and the rate it
view, more direct than what any individual
is actually receiving, than they would be
consumer would be able to allege; after
for consumers, who would need to estab-
all, the lowering of prices paid to Omnicare
lish what Defendants would be charging
might, but might not, be passed on to
them if it had not entered into the buyers’
Defendants’ consumers. This analysis also
conspiracy and charged Omnicare an un-
suffices to address the fourth AGC factor,
lawfully high rate.
the directness of the injury. See Sumito-
mo, 306 F.3d at 484. Finally, the sixth factor is the risk of
The second factor is whether Omnicare duplicate recovery or complex damage ap-
has alleged an improper motive. See id. portionment. Id. Defendants have not
Omnicare has alleged that UnitedHealth suggested that allowing Omnicare to sue
and PacifiCare maintained a conscious now, rather than waiting for a class of
commitment to a price-fixing scheme. potential consumer plaintiffs, will create
(Am.Compl.¶ 72.) As intent and motive such problems.
may be generally averred in a pleading, Thus, all six factors either favor Omni-
see Fed.R.Civ.P. 9(b), this is a sufficient care’s role as plaintiff, or are neutral with
allegation of improper motive. respect to whether Omnicare or Defen-
The third factor is the type of injury and dants’ consumer clients would be better
whether it was one Congress sought to plaintiffs. As both the Illinois Brick di-
redress. Sumitomo, 306 F.3d at 484. In rect-purchaser rule and the AGC proxi-
AGC, the court focused this inquiry on mate cause rule have been satisfied, this
whether the plaintiff was a ‘‘consumer or court finds that Omnicare is a proper
competitor’’ in the market in which trade plaintiff in this antitrust action. Further,

as the remaining elements of a Sherman dentistry, filed state court action against
Act section 1 claim have also been met, board of trustees and individual university
Count I of Omnicare’s Amended Complaint officials, alleging he was summarily sus-
survives Defendants’ motion to dismiss. pended from his position without appropri-
ate procedure and was thereafter dis-
B. Count II: The Kentucky Consumer charged in retaliation for his suit. Action
Protection Act
was removed to federal court. Defendants
Although Defendants state in their moved to dismiss amended complaint.
Memorandum in Support of Defendant’s
Holdings: The District Court, Elaine E.
Motion to Dismiss that they are seeking to
Bucklo, J., held that:
dismiss Count II (Defs.’ Mem. 1), which is
a claim under the Kentucky Consumer (1) employee stated procedural due pro-
Protection Act, Ky.Rev.Stat. Ann. cess claim for deprivation of property
§ 367.175, they offer no argument ad- interest;
dressed specifically to that claim, in either (2) employee failed to state § 1983 proce-
their opening or reply memoranda. In dural due process claim based on viola-
fact, at no point in this briefing has either tion of his right to occupational liberty;
party referred the court to any Kentucky
legal authorities. Accordingly, this portion (3) complaint adequately stated substan-
of the motion is denied. See APS Sports tive due process claim;
Collectibles, Inc. v. Sports Time, Inc., 299 (4) complaint adequately stated ‘‘class of
F.3d 624, 631 (7th Cir.2002) (noting that it one’’ equal protection claim;
is not the duty of the courts to construct (5) lawsuit involved a ‘‘matter of public
parties’ legal arguments for them, and that concern,’’ for purposes of retaliatory
conclusory arguments are waived). discharge claim;
CONCLUSION (6) defendants were not entitled to dis-
For the foregoing reasons, Defendants’ missal on basis of qualified immunity;
motion to dismiss Counts I and II of Omni- (7) while defendants could be sued in their
care’s First Supplemental and Amended official capacity for injunctive relief,
Complaint (73) is denied. they could not be sued in that capacity
for declaration that plaintiff’s rights

, were violated by his past removal from

his position and nonrenewal of his con-
tract; and
(8) complaint adequately stated claims for
Michael MEER, Plaintiff, mandamus and injunctive relief.
v. Motion granted in part and denied in part.
Bruce GRAHAM, et al., Defendants.
No. 07 C 1058.
1. Federal Civil Procedure O1829, 1835
United States District Court, In resolving motion to dismiss, district
N.D. Illinois,
judge must accept all well-pled facts in
Eastern Division.
plaintiff’s complaint as true and must view
Oct. 5, 2007. allegations in light most favorable to plain-
Background: Public employee, the former tiff. Fed.Rules Civ.Proc.Rule 12(b)(6), 28
clinic chief at state university college of U.S.C.A.