CHARLES P. KOCORAS, District Judge:
This matter is before the Court on five Motions for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.
First, the Wholesaler Defendants
move for Summary Judgment on plaintiffs' claims against them in the Consolidated and Amended Complaint under § 1 of the Sherman Act, 15 U.S.C. § 1. According to the Wholesaler Defendants, the plaintiffs' chargeback allegations find no support in either fact or law.
Next, the Manufacturer Defendants
move for Judgment on the Pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, or in the alternative for Summary Judgment, dismissing the indirect purchaser claims asserted against them in the Consolidated and Amended Complaint. As grounds for their motion, the Manufacturer Defendants maintain that the putative class plaintiffs, as indirect purchasers, lack standing under Illinois Brick Co. v. Illinois, 431 U.S. 720, 52 L. Ed. 2d 707, 97 S. Ct. 2061 (1977).
Finally, Defendant Burroughs Wellcome, Co. ("Burroughs Wellcome") moves for Summary Judgment in its favor on certain
individual plaintiffs' Sherman Act claims for treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15. In support of its motion Burroughs Wellcome asserts that the plaintiffs in the various individual actions, with the exception of Plaintiff Albertson's Inc., have not purchased brand-name prescription drugs directly from Burroughs Wellcome. Accordingly, Burroughs Wellcome claims that under Illinois Brick, the plaintiffs who are indirect purchasers are barred from recovering treble damages under § 4 of the Clayton Act.
Each motion will be addressed below. Before proceeding, however, we first examine the legal standard from which to judge a motion for summary judgment.
Summary judgment is appropriate if the pleadings, answers to interrogatories, admissions, affidavits and other material show "that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(b). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). The party seeking summary judgment carries the initial burden of showing that no such issue of material fact exists. The moving party may discharge this burden by "'showing'. . . that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Pursuant to Rule 56(b), when a properly supported motion for summary judgment is made, the adverse party must set forth specific facts showing that there is a genuine issue as to any material fact and that the moving party is not entitled to judgment as a matter of law. Anderson, 477 U.S. at 250.
In making our determination, we are to draw inferences from the record in the light most favorable to the non-moving party. We are not required, however, to draw every conceivable inference, but rather, only those that are reasonable. De Valk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir. 1987); Bartman v. Allis-Chalmers Corp., 799 F.2d 311, 313 (7th Cir. 1986), cert. denied, 479 U.S. 1092, 94 L. Ed. 2d 160, 107 S. Ct. 1304 (1987). The nonmovant may not rest upon mere allegations in the pleadings or upon conclusory statements in affidavits; rather he must go beyond the pleadings and support his contentions with proper documentary evidence. Celotex, 477 U.S. at 324; Howland v. Kilquist, 833 F.2d 639, 642 (7th Cir. 1987).
The plain language of Rule 56(c) mandates the entry of summary judgment against a party who fails to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. Celotex, 477 U.S. at 322. "In such a situation there can be 'no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial". Id. at 323.
It is in consideration of these principles that we examine the various motions before us.
I. The Wholesaler Defendants' Motion for Summary Judgment
The Wholesaler Defendants move for summary judgment in their favor on the allegations asserted against them in plaintiffs' Consolidated and Amended Complaint. According to the Wholesaler Defendants, the plaintiffs' § 1 Sherman Act claims against them must fail as a matter of indisputable fact and law.
The Wholesaler Defendants contend that there is no triable issue on the question of whether they had conspired to "fix, raise, maintain and stabilize the prices of Prescription Brand Name Drugs sold to the plaintiffs and the [putative] class members at supra-competitive levels." Consolidated and Amended Class Action Complaint at P 79. As the Wholesaler Defendants see it, the plaintiffs' conspiracy allegations, as they relate to the Wholesalers, are based only upon chargeback agreements entered into by each Wholesaler with the Manufacturer Defendants. The Wholesaler Defendants contend that as a matter of undisputable fact, the chargeback agreements
do not fix or restrict the prices at which the Wholesalers can sell the Manufacturers' products to plaintiffs. Thus, argue the Wholesalers, since these chargeback agreements are legal on their face and do not directly involve the plaintiffs, the plaintiffs' conspiracy allegations against the Wholesaler Defendants must fail. We do not agree with the Wholesaler Defendant's approach of fragmenting and compartmentalizing the factual components of the plaintiffs' conspiracy claim.
First of all, in their Consolidated and Amended Complaint, the plaintiffs allege that the Manufacturer Defendants and the Wholesaler Defendants entered into and are engaging in "a continuing nationwide contract, combination and/or conspiracy in the unreasonable restraint of trade and commerce . . . in violation of Section 1 of the Sherman Act." Consolidated and Amended Class Action Complaint at P 78. The plaintiffs further allege that the substantial terms of this conspiracy were "to fix, raise, maintain and stabilize the prices of Prescription Brand Name Drugs sold to the plaintiffs and the class members at supra-competitive levels." Id. at P 79. With respect to the Wholesaler Defendants' involvement in this scheme, the plaintiffs' allege that the Manufacturers and Wholesalers have implemented and have contracted to implement a "chargeback" system which has the effect of: (1) "fixing, raising, maintaining and stabilizing at above competitive levels prices charged to class members for Prescription Brand Name Drugs," Id. at P 80(b); and (2) "preclud[ing] the wholesalers from reselling the Prescription Brand Name Drugs to Drug Stores at the much lower prices made available to Institutional Pharmacies," Id. at P 80(d).
Plaintiffs contest the Wholesaler Defendants' motion essentially arguing that the Wholesaler Defendants have missed the mark. According to the plaintiffs they are not claiming that the chargeback agreements submitted by the Wholesaler Defendants standing alone and on their face are illegal. Rather, the plaintiffs are claiming that these chargeback agreements are simply one component of a single unitary scheme between and among the Manufacturer Defendants and the Wholesalers to artificially raise, fix, maintain and stabilize the price at which brand name prescription drugs are sold to plaintiffs and the putative class members. Thus, according to the plaintiffs, the content of the Manufacturer-Wholesaler agreements is insufficient to support entry of summary judgment.
We agree with the plaintiffs that summary judgment may not be entered at this time. Although the Wholesaler Defendants have sufficiently demonstrated that the chargeback agreements do not specifically deal with the prices the plaintiffs pay, the defendants have failed to establish that there is no issue of material fact as to plaintiffs allegations that the Wholesalers participated in an antitrust violation. In an attempt to dispose of this action at an early stage, the Wholesaler Defendants have fragmented and compartmentalized the plaintiffs' conspiracy allegations and have asked us to look at their conduct apart from the Manufacturer Defendants' alleged conduct, and apart from the other allegations of the complaint. The United States Supreme Court, however, has expressly admonished against such an approach:
In [conspiracy anti-trust cases] plaintiffs should be given the full benefit of their proof without tightly compartmentalizing the various factual components and wiping the slate clean after scrutiny of each. ". . . The character and effect of a conspiracy are not to be judged by dismembering it and viewing its separate parts, but only by looking at it as a whole." United States v. Patten, 226 U.S. 525, 544, 57 L. Ed. 333, 33 S. Ct. 141 (1913). and in a case like the one before us, the duty of the jury was to look at the whole picture and not merely at the individual figures in it.
Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 698-99, 8 L. Ed. 2d 777, 82 S. Ct. 1404 (1962) (quoting American Tobacco Co. v. United States, 147 F.2d 93, 106 (6th Cir. 19--)).
Here, in their Amended and Consolidated Complaint, the plaintiffs are not alleging that the chargeback agreements, standing alone, constitute anti-trust violations. Rather, the plaintiffs specifically allege that the use of chargeback agreements between the Wholesaler Defendants and the Manufacturer Defendants was one form of concerted action which the defendants engaged in to fix prices. See Consolidated and Amended Complaint at P 80(a)-(g). In light of the U.S. Supreme Court's cautionary warning in Continental Ore, we will not isolate the allegations against the Wholesaler Defendants' and rule on the propriety of their individual acts in the face of the lager scheme pled.
In their Reply Memorandum, the Wholesaler Defendants contend that summary judgment must be entered in their favor because the plaintiffs have not satisfied their burden of coming forward with evidence that "'tends to exclude the possibility' that the alleged co-conspirators acted independently." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986), cert. denied, 481 U.S. 1029, 95 L. Ed. 2d 527, 107 S. Ct. 1955 (1987) (quoting Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752, 764, 79 L. Ed. 2d 775, 104 S. Ct. 1464 (1984), and other cases cited therein). On the contrary, it is the Wholesaler Defendants, as the moving party, that have not satisfied its initial burden of showing that it is entitled to summary judgment. As the U.S. Supreme Court recently observed, Matsushita's requirement that plaintiffs' claims make "economic sense" did not change the burden carried by a plaintiff facing summary judgment in an antitrust case:
The [Matsushita] Court did not hold that if the moving party enunciates any economic theory supporting its behavior, regardless of its accuracy in reflecting the actual market, it is entitled to summary judgment. Matsushita demands only that the nonmoving party's inferences be reasonable in order to reach the jury, a requirement that was not invented, but merely articulated, in that decision. (footnote omitted).
Eastman Kodak Co. v. Image Technical Servs., U.S. , , 112 S. Ct. 2072, 2083, 119 L. Ed. 2d 265 (1992). The Court in Eastman Kodak further observed that the moving party in an antitrust case bears "a substantial burden" in establishing that it is entitled to summary judgement. Id. Here, we find that the Wholesaler Defendants have failed to meet that burden. Although the chargeback agreements do not, as argued by the Wholesaler Defendants, specifically deal with the prices the plaintiffs pay, the plaintiffs have made a sufficient showing, at least at this point, that it is not unreasonable to conclude that these agreements are a part of an overall unitary chargeback scheme.
Essentially, whether the chargeback agreements are an element of an overall illegal scheme among the defendants is a disputed issue of material fact. Accordingly, mindful of the U.S. Supreme Court's admonition that summary judgment should be used sparingly in complex antitrust cases unless the record is clear that the antitrust claims cannot succeed, Wigod v. Chicago Mercantile Exchange, 981 F.2d 1510, 1514 (7th Cir. 1992), we will not grant the Wholesaler Defendants' motion for summary judgement at this time.
II. The Manufacturer Defendants' Motion for Judgment on the Pleadings or, in the alternative, for Summary Judgment
The Manufacturer Defendants' move for judgment on the pleadings, or in the alternative, for summary judgment in their favor. After the close of pleadings, a Defendant may, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, move for judgment on the pleadings to dispose of the case on the basis of the underlying substantive merits. The appropriate standard for a judgment on the pleadings is that applicable to summary judgment, except that the court may consider only the contents of the pleadings. Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir. 1993). Thus, all well-pleaded allegations in the plaintiffs' pleadings are taken as true, and the facts and inferences to be drawn from those allegations are viewed in a light most favorable to the plaintiffs. Id. The granting of a Rule 12(c) motion will not be affirmed unless no genuine issues of material fact remain to be resolved and unless the [Defendant] is entitled to judgment as a matter of law. Id.
The Manufacturer Defendants assert that they are entitled to judgment as a matter of law because plaintiffs, as indirect purchasers, lack standing to bring their asserted claims against them. In support of their argument, the Manufacturer Defendants cite the United States Supreme Court's decision in Illinois Brick Co. v. Illinois, 431 U.S. 720, 52 L. Ed. 2d 707, 97 S. Ct. 2061 (1977).
In Illinois Brick, plaintiff, the State of Illinois, brought suit against the manufacturers and distributors of concrete blocks, alleging a conspiracy to fix prices in violation of the antitrust laws. The concrete blocks were sold by the manufacturers to masonry contractors who used them in masonry structures. General contractors then used these structures in buildings which were ultimately sold to the state. Illinois Brick, 431 U.S. at 726-27. The plaintiff claimed that the intermediaries in the chain of distribution, the masonry contractors and general contractors, "passed on"
the increased fixed prices to the plaintiffs. The Supreme Court denied the plaintiffs recovery, holding that as an indirect purchaser in the chain of distribution, the plaintiff was precluded from seeking damages for illegal overcharges passed on to the plaintiff by intermediates in the distribution chain who purchased directly from the manufacturers.
Id., 431 U.S. at 746.
The Defendant Manufacturers analogize their situation to that of the block manufacturer defendants in Illinois Brick and assert that, as in Illinois Brick, the plaintiffs, as indirect purchasers, are precluded from bringing suit against them. The plaintiffs, however, insist that Illinois Brick does not bar their suit against the Manufacturer Defendants. The plaintiffs argue that their claim against the Manufacturer Defendants is not for overcharges "passed on" by the wholesalers, such as the type that would be barred by Illinois Brick. On the contrary, the plaintiffs allege overcharges directly imposed on the plaintiffs by both the manufacturers and the wholesalers as a part of a price-fixing conspiracy in which all of the Defendants were participants. See Consolidated and Amended Class Action Complaint at P 80.
The issue before the Court, therefore, is whether Illinois Brick precludes the plaintiffs from maintaining a suit against the Manufacturer Defendants based on allegations of a vertical, two-tiered conspiracy between the wholesalers and the manufacturers. The Seventh Circuit entertained the issue in Fontana Aviation, Inc. v. Cessna Aircraft Co., 617 F.2d 478 (7th Cir. 1980). In Fontana, an aircraft dealer, alleging a conspiracy between the aircraft manufacturer and the aircraft distributor, brought suit against the manufacturer charging antitrust violations. The Seventh Circuit held that Illinois Brick did not bar the plaintiff dealer's claim because the plaintiff did not seek damages for unlawful indirect overcharges passed on to it. Id. at 480. Rather, the plaintiff sued on the basis of a conspiracy consisting of a combination of acts designed to cause plaintiff competitive injury. Id. In its discussion of Illinois Brick's applicability to the situation, the Seventh Circuit stated:
We are not satisfied that the Illinois Brick rule directly applies in circumstances where the manufacturer and the intermediary are both alleged to be co-conspirators in a common illegal enterprise resulting in intended injury to the buyer.