Multiple Claims Survive in Pharmacy Website Antitrust Case After Judgment on Motions to Dismiss

On Tuesday, Judge Kenneth M. Kara of the Southern District of New York entered mixed judgments on motions to dismiss — denying two, partially granting one, and fully granting the last — brought by defendants alleged to have staged a “group boycott” against LLC, the plaintiff, in an attempt to prevent the company from competing in the market.

The plaintiff, a company that offers accreditation for pharmacies worldwide and drug price comparison services, filed its complaint in August 2019 and an amended complaint two months later against the National Association of Boards of Pharmacy (NABP), Alliance for Safe Online Pharmacies (ASOP), Center for Safe Internet Pharmacies Ltd. (CSIP), LegitScript LLC, and Partnership for Safe Medicines Inc. (PSM), alleging that the defendants made coordinated efforts to suppress the plaintiff from engaging in business in the online pharmacy verification and drug price comparison industry.

Particularly, the plaintiff claimed that NABP added the plaintiff’s website to a list called “Not Recommended Sites”; that CSIP — an organization of “internet commerce gatekeepers” such as Google and Microsoft — ran targeted advertisements online against the plaintiff; that CSIP’s internet gatekeeping technology used to detect possibly illegitimate pharmacy websites began prompting a “red caution shield” and a warning to pop up when anyone clicked on search results for the plaintiff’s webpages; that LegitScript or NABP told one vendor to flag the plaintiff’s site as “not safe”; and that all of the defendants published “disparaging” articles about the plaintiff. The companies defended their alleged actions, claiming that the plaintiff was participating in unlawful drug importation.

“As a result of these actions, since March 2019, Plaintiff’s site traffic from organic search results has dropped more than 78%, and its monthly click-through revenue has dropped more than 77%,” the court explained, paraphrasing the plaintiff’s claims.

Four separate motions to dismiss were before the court: a joint motion by all defendants, one by PSM, one by ASOP, and one by LegitScript. The judge completely denied the joint motion and ASOP’s motion, partially granted PSM’s motion, and fully granted LegitScript’s motion.

The movants in the joint motion argued that the plaintiff failed to allege harm to competition, failed to establish injury from any alleged antitrust activity — claiming that the harm the plaintiff asserted was because the defendants were suppressing unlawful drug importation by the plaintiff — and did not sufficiently argue that a conspiracy existed. On top of those challenges, the movants claimed that the plaintiff is barred by a statute of limitations.

The court, in denying the joint motion, found that the plaintiff had adequately alleged antitrust injury. According to the court, since it cannot conclude whether the business of the plaintiff is completely illegal, the claim by the defendants that the plaintiff cannot allege an antitrust injury had no standing. The court sided with the plaintiff on the rest of the joint movants’ claims.

PSM and ASOP, in their respective motions, argued that the plaintiff did not sufficiently claim that they were a part of the alleged conspiracy and that they otherwise were protected by Noerr-Pennington, a doctrine meant to protect corporations petitioning the government from antitrust liability.

The court partially granted PSM’s motion as to its statements “aimed at influencing governmental action” through lobbying for policy around illegal drug importation, agreeing that a policy-driven motivation shielded PSM from liability. However, the court denied PSM’s motion “insofar as it seeks immunity for liability based on its other statements,” those which the court did not examine in the opinion.

In denying ASOP’s motion, the court found ASOP’s argument that its motivations for its public statements against the plaintiff were policy driven to be unconvincing “in light of Defendants’ alleged pivot from government to private advocacy,” the court said.

The court swiftly granted LegitScript’s motion to dismiss, finding no personal jurisdiction over the company.

The plaintiff is represented by Bona Law P.C. NABP is represented by Barnes & Thornburg LLP and Baker Botts LLP. ASOP is represented by Axinn, Veltrop & Harkrider LLP. CSIP is represented by Herrick Feinstein LLP. LegitScript is represented by Gordon Rees Scully Mansukhani LLP. PSM is represented by Ballard Spahr LLP.