Jefferson County Pharmaceutical Association, Inc v. Abbott Laboratories

• Decision Date: 23 February 1983
• Docket Number: No. 81-827,81-827
• Citation: 460 U.S. 150,74 L.Ed.2d 882,103 S.Ct. 1011
• Parties: JEFFERSON COUNTY PHARMACEUTICAL ASSOCIATION, INC., Petitioner v. ABBOTT LABORATORIES et al
• Court: U.S. Supreme Court

74 L.Ed.2d 882

103 S.Ct. 1011

460 U.S. 150

JEFFERSON COUNTY PHARMACEUTICAL ASSOCIATION, INC., Petitioner

v ABBOTT LABORATORIES et al.

No. 81-827.

Argued Nov. 8, 1982.

Decided Feb. 23, 1983.

Syllabus

Petitioner trade association of retail pharmacists and pharmacies filed an antitrust suit in Federal District Court against respondent pharmaceutical manufacturers, the Board of Trustees of the University of Alabama, which operates pharmacies in connection with its hospitals, and a county hospital pharmacy. Petitioner alleged that respondent manufacturers violated the price-discrimination proscriptions of the Robinson-Patman Act by selling their products to respondent hospital pharmacies at prices lower than those charged petitioners' members for like products, and that respondent pharmacies knowingly induced such lower prices in violation of the Act and sold the drugs to the general public in direct competition with privately owned pharmacies. The District Court granted respondents' motions to dismiss the complaint, holding that state purchases are beyond the Act's intended reach. The Court of Appeals affirmed.

Held: The sale of pharmaceutical products to state and local government hospitals for resale in competition with private pharmacies is not exempt from the Act's proscriptions. Pp. 153-171.

(a) The Act by its terms does not exempt state purchases, and the statutory language is sufficiently broad to cover governmental bodies. Thus, the Act's plain language strongly suggests that there is no exemption for state purchases to compete with private enterprise. Pp. 154-157.

(b) Such an exemption is not supported by the purposes of the antitrust laws, including the Robinson-Patman Act. Those laws represent a carefully studied attempt to bring within them every person engaged in business whose activities might restrain or monopolize commercial intercourse among the States. And the Act's history does not reveal any legislative intention to enable a State, by an unexpressed exemption, to enter private competitive markets with congressionally approved price advantages. Pp. 157-162.

(c) Nor is respondents' contention that state purchases are outside the Act's scope clearly supported by subsequent legislative events (particularly the hearings on the Act held in the late 1960's) or by court decisions or the interpretations of commentators and executive officials. Thus, Congress cannot be said to have left untouched a universally held interpretation of the Act. Pp. 163-170.

(d) It is not for this Court to indulge in the business of policymaking in the field of antitrust legislation. The legislative history is replete with references to the economic evil of large organizations purchasing from other large organizations for resale in competition with small, local retailers. To create an exemption in this case clearly would be contrary to Congress' intent. Pp.170-171

656 F.2d 92 (C.A.5 1981), reversed and remanded.

Joe L. Tucker, Jr., Bessemer, Ala., for petitioner.

David Klingsberg, New York City, for respondents.

Justice POWELL delivered the opinion of the Court.

The issue presented is whether the sale of pharmaceutical products to state and local government hospitals for resale in competition with private retail pharmacies is exempt from the proscriptions of the Robinson-Patman Act.

I

Petitioner, a trade association of retail pharmacists and pharmacies doing business in Jefferson County, Alabama commenced this action in 1978 in the District Court for the Northern District of Alabama as the assignee of its members' claims. Respondents are 15 pharmaceutical manufacturers, the Board of Trustees of the University of Alabama, and the Cooper Green Hospital Pharmacy. The University operates a medical center, including hospitals, and a medical school. Located in the University's medical center are two pharmacies. Cooper Green Hospital is a county hospital, existing as a public corporation under Alabama law.

The complaint seeks treble damages and injunctive relief under §§ 4 and 16 of the Clayton Act, 38 Stat. 731, 737, 15 U.S.C. §§ 15 and 26, for alleged violations of § 2(a) and (f) of the Clayton Act, 38 Stat. 730, as amended by the Robinson-Patman Act (the Act), 49 Stat. 1526, 15 U.S.C. § 13(a) and (f). Petitioner contends that the respondent manufacturers violated § 2(a) ¹ by selling their products to the University's two pharmacies and to Cooper Green Hospital Pharmacy at prices lower than those charged petitioner's members for like products. Petitioner alleges that the respondent hospital pharmacies knowingly induced such lower prices in violation of § 2(f) ² and sold the drugs to the general public in direct competition with privately owned pharmacies. Petitioner also alleges that the price discrimination is not exempted from the proscriptions of the Act by 15 U.S.C. § 13c.³

Respondents moved to dismiss the complaint on the ground that state purchases ⁴ are exempt as a matter of law from the sanctions of § 2. In granting respondents' motions, the District Court expressly accepted as true the allegations that local retail pharmacies had been injured by the challenged price discrimination and that at least some of the state purchases were not exempt under § 13c. 656 F.2d 92, 98 (CA5 1981) (reprinting District Court's opinion as Appendix). The District Court held that "governmental purchases are, without regard to 15 U.S.C. § 13c, beyond the intended reach of the Robinson-Patman Price Discrimination Act, at least with respect to purchases for hospitals and other traditional governmental purposes." 656 F.2d 92, 102 (1981). The Court of Appeals for the Fifth Circuit, in a divided per curiam decision, affirmed "on the basis of the district court's Memorandum of Opinion." 656 F.2d, at 93.⁵

We granted certiorari to resolve this important question of federal law. 455 U.S. 999, 102 S.Ct. 1629, 71 L.Ed.2d 865 (1982). We now reverse.

II

The issue here is narrow. We are not concerned with sales to the federal government, nor with state purchases for use in traditional governmental functions.⁶ Rather, the issue before us is limited to state purchases for the purpose of competing against private enterprise—with the advantage of discriminatory prices—in the retail market.⁷

The courts below held, and respondents contend, that the Act exempts all state purchases. Assuming, without deciding, that Congress did not intend the Act to apply to state purchases for consumption in traditional governmental functions, and that such purchases are therefore exempt, we conclude that the exemption does not apply where a State has chosen to compete in the private retail market.

III

The Robinson-Patman Act by its terms does not exempt state purchases. The only express exemption is that for nonprofit institutions contained in 15 U.S.C. § 13c.⁸ Moreover, as the courts below conceded, "[t]he statutory language—'persons' and 'purchasers'—is sufficiently broad to cover governmental bodies. 15 U.S.C. §§ 12, 13(a, f)." 656 F.2d, at 99.⁹ This concession was compelled by several of this Court's decisions.¹⁰ In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 395, 98 S.Ct. 1123, 1127, 55 L.Ed.2d 364 (1978), for example, we stated without qualification that "the definition of 'person' or 'persons' embraces both cities and States." ¹¹ Respondents would distinguish City of Lafayette from the case before because it involved the Sherman Act rather than the Robinson-Patman Act.¹² Such a distinction ignores the specific reference to the Robinson-Patman Act in our discussion of the all-inclusive nature of the term "person." 435 U.S., at 397, n. 14, 98 S.Ct., at 1128, n. 14. We do not perceive any reason to construe the word "person" in that Act any differently than we have in the Clayton Act, which it amends,¹³ and it is undisputed that the Clayton Act applies to states. See Hawaii v. Standard Oil Co., 405 U.S. 251, 260-261, 92 S.Ct. 885, 890, 31 L.Ed.2d 184 (1972).¹⁴ In sum, the plain lan- guage of the Act strongly suggests that there is no exemption for state purchases to compete with private enterprise.

IV

The plain language of the Act is controlling unless a different legislative intent is apparent from the purpose and history of the Act. An examination of the legislative purpose and history here reveals no such contrary intention.

A.

Our cases have been explicit in stating the purposes of the antitrust laws, including the Robinson-Patman Act. On numerous occasions, this Court has affirmed the comprehensive coverage of the antitrust laws and has recognized that these laws represent "a carefully studied attempt to bring within [them] every person engaged in business whose activities might restrain or monopolize commercial intercourse among the states." United States v. South-Eastern Underwriters Association, 322 U.S. 533, 553, 64 S.Ct. 1162, 1173, 88 L.Ed. 1440 (1944).¹⁵ In Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the Court observed that "our cases have repeatedly established that there is a heavy pre- sumption against implicit exemptions" from the antitrust laws. Id., at 787, 95 S.Ct., at 2013 (citing United States v. Philadelphia National Bank, 374 U.S. 321, 350-351, 83 S.Ct. 1715, 1734-1735, 10 L.Ed.2d 915 (1963); California v. FPC, 369 U.S. 482, 485, 82 S.Ct. 901, 903, 8 L.Ed.2d 54 (1962)).¹⁶ In City of Lafayette, supra, applying antitrust laws to a city in competition with a private utility, we held that no exemption for local governments would be implied. The Court emphasized the purposes and scope of the antitrust laws: "[T]he economic choices made by public corporations . . ., designed as they are to assure maximum benefits for the community constituency, are not inherently more likely to comport with the broader interests of national economic well-being than are those of private corporations acting in furtherance of the interests of the organization and its shareholders." 435...