Abarca Health, LLC v. Pharmpix Corp.

• Decision Date: 31 March 2012
• Docket Number: Civil No. 11–1218 (BJM).
• Citation: 915 F.Supp.2d 210
• Parties: ABARCA HEALTH, LLC, et al., Plaintiffs, v. PHARMPIX CORPORATION, et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

915 F.Supp.2d 210

ABARCA HEALTH, LLC, et al., Plaintiffs,

v.PHARMPIX CORPORATION, et al., Defendants.

Civil No. 11–1218 (BJM).

United States District Court, D. Puerto Rico.

March 31, 2012.

Ana M. Rodriguez–Rivera, Carla Garcia–Benitez, Mauricio O. Muniz–Luciano, Vanessa Carballido–Clerch, O'Neill & Borges, San Juan, PR, for Plaintiffs.

Aileen Edme Vazquez–Jimenez, Jaime A. Lopez–Rodriguez, Samuel F. Pamias–Portalatin, Hoglund & Pamias, PSC, San Juan, PR, for Defendants.

OPINION AND ORDER

BRUCE J. McGIVERIN, United States Magistrate Judge.

In a verified complaint, Abarca Health, LLC (“Abarca”) and Pharmacy Insurance Corporation of America (“PICA”) (collectively, “plaintiffs” or “counterclaim defendants”) sued PharmPix Corporation (“PharmPix”) and others (collectively, “defendants”) alleging copyright infringement under the Copyright Act, 17 U.S.C. §§ 501 et seq., unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a), and Article 27 of the Puerto Rico Trademark Act, 10 L.P.R.A. § 223x, tort liability for misuse of trade secrets under Article 1802 of the Civil Code, 31 L.P.R.A. § 5141, breach of contract under Article 1059 of the Civil Code, 31 L.P.R.A. § 3023, and breach of fiduciary duty. (Docket No. 1, hereinafter “Compl.”). PharmPix asserted counterclaims against the plaintiffs for unlawful restraint of trade and monopolization in violation of the Sherman Act, 15 U.S.C. §§ 1 et seq., and the Puerto Rico Antitrust Act, 10 L.P.R.A. §§ 257 et seq., as well as for “unfair competition under the common law and the laws of Puerto Rico.” (Docket No. 41, p. 23–38, hereinafter “Countercl.”). These claims arise out of a tangled dispute regarding the parties' conduct in the pharmacy benefits industry, touching on their alleged use of computer software, misappropriation of business plans, and communications with prospective customers.

Before the court is plaintiffs' motion to dismiss the counterclaim in its entirety under Fed R. Civ. P. 12(b)(6). (Docket No. 56). The defendants opposed (Docket No. 67) and plaintiffs replied (Docket No. 82). Also before the court is defendants' motion to dismiss the plaintiffs' unfair competition claims under Rule 12(c). (Docket No. 100). Plaintiffs opposed this motion. (Docket No. 115). For the reasons that follow, plaintiffs' motion to dismiss the counterclaim is granted in part, and defendants' motion to dismiss the unfair competition claims is denied.

MOTIONS TO DISMISS FOR FAILURE TO STATE A CLAIM

To survive a motion to dismiss at the pleading stage, “an adequate complaint must provide fair notice to the defendants and state a facially plausible legal claim.” Ocasio–Hernández v. Fortuño–Burset, 640 F.3d 1, 12 (1st Cir.2011). A court parses the allegations of the complaint in two steps. First, “ ‘legal conclusions couched as fact’ or ‘threadbare recitals of the elements of a cause of action’ ” are identified and completely disregarded. Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949–50, 173 L.Ed.2d 868 (2009)) (alteration marks omitted). The remaining “[n]on-conclusory factual allegations” are then “treated as true, even if seemingly incredible.” Id. The overall standard is only satisfied if those facts “state a plausible, not a merely conceivable, case for relief”; however, a court must not “attempt to forecast a plaintiff's likelihood of success on the merits.” Id. The standard applies to both Rule 12(b)(6) and Rule 12(c) motions to dismiss. See Pérez–Acevedo v. Rivero–Cubano, 520 F.3d 26, 29 (1st Cir.2008).

PLAINTIFFS' MOTION TO DISMISS PHARMPIX'S COUNTERCLAIMS

PharmPix's counterclaim alleges that Abarca and PICA conspired to restrain trade and engaged in monopolization and unfair competition in violation of the Sherman Act and the Puerto Rico Antitrust Act. Abarca and PICA seek dismissal of all claims under Rule 12(b)(6).

I. Factual Allegations

PharmPix is a Puerto Rico corporation with a main office in Guaynabo. (Countercl., ¶ 3). PharmPix was incorporated in April 2009 to provide “Pharmacy Benefit Management” (PBM) services in Puerto Rico, and began developing “web based PBM software” with which to do so. ( Id., ¶ 7). In March 2010, following the completion of its software, PharmPix applied for federal copyright registration, and received a registration certificate in 2011. ( Id., ¶¶ 8–9). Abarca and PICA are Puerto Rico companies with offices in San Juan. ( Id., ¶¶ 4–5).

A month after PharmPix submitted its application, the Commonwealth Insurance Fund Corporation (“CFSE”) published a request for proposals for PBM services, including the possibility of purchasing a PBM software license. ( Id., ¶ 10). PharmPix submitted a bid proposal prior to the deadline; that proposal contained no software or source code. ( Id., ¶ 11). Abarca also submitted a proposal; the proposals were open to the public, and Abarca officers “spent well around two hours reviewing PharmPix's proposal, while feverishly taking notes as they examined it.” ( Id., ¶ 12). PharmPix officers reviewed Abarca's proposal, and found it failed to meet CFSE's requirements: it did not offer “graphics or schemes” of Abarca's PBM solution, and indicated that the software licensing price was “to be discussed,” leaving it free to see what other bids' price points were. ( Id., ¶ 13).

PharmPix approached two other prospective customers in December 2010: First Medical Health Plan, Inc. (“First Medical”) and Plan de Salud Menonita (“Menonita”). ( Id., ¶ 14). PharmPix's corporate strategy was to contact these businesses by the end of 2010. ( Id., ¶ 14). Only PharmPix officers and Scott Domínguez (“Domínguez”), a witness for Abarca in the present suit, knew of this strategy. ( Id., ¶ 14). Negotiations with First Medical suddenly broke down after PharmPix terminated Domínguez and Abarca “unexpectedly” presented a proposal to First Medical. ( Id., ¶ 15). Abarca also proposed a PBM solution to Menonita, and called Menonita to inquire about its relationship with PharmPix. ( Id., ¶ 16).

Abarca informed Menonita that it intended to sue PharmPix for copyright infringement, doing so in order to prevent Menonita and PharmPix from conducting business with each other. ( Id., ¶ 17). Abarca informed various “peers and clients” in the industry of its suit, with the intent of preventing PharmPix from doing business in Puerto Rico. ( Id., ¶ 18).

PharmPix was selected as a finalist for the CFSE proposal; PharmPix officers have met with CFSE officials, and PharmPix's proposal was superior to Abarca's. ( Id., ¶ 19). Abarca sued PharmPix in an attempt to prevent PharmPix from winning the contract. ( Id., ¶ 19).

Its suit and communications are also intended to prevent PharmPix from bidding on a contract with the “Administración de Seguros de Salud de Puerto Rico” (“ASES”). ( Id., ¶ 20). Abarca intends to “continue sneaking into PharmPix's copyrighted software and its trade secrets in order to copy and further use them to improve their own software.” ( Id., ¶ 21).

With the intent to stifle competition, Abarca and PICA (1) falsely alleged that PharmPix infringed their copyrights, engaged in unfair competition, (2) conspired to prevent PharmPix from securing business in Puerto Rico, and (3) “intend to enforce through Abarca, counterclaim plaintiff[']s duties (if any) towards ... PICA.” ( Id., ¶ 25). Abarca and PICA “have also been interfering with contractual relations of other PBM service providers in Puerto Rico,” with the intent of monopolizing PBM services in Puerto Rico. ( Id., ¶ 26).

II. Discussion

PharmPix alleges that Abarca and PICA engaged in an unlawful conspiracy in restraint of trade and monopolization, violating the Sherman Act, 15 U.S.C. §§ 1 et seq., and the Puerto Rico Antitrust Act, 10 L.P.R.A. §§ 258 et seq., as well as “unfair competition under the common law and the laws of Puerto Rico.” The counterclaim defendants seek dismissal of each of these claims. ¹

A. Antitrust Standing

The counterclaim defendants argue that PharmPix lacks “antitrust standing” to pursue its Sherman Act claims. (Docket No. 56, p. 10–11). Antitrust standing is a prudential doctrine limiting the universe of plaintiffs who may bring antitrust claims, based on the balancing of six factors:

(1) the causal connection between the alleged antitrust violation and harm to the plaintiff; (2) an improper motive; (3) the nature of the plaintiff's alleged injury and whether the injury was of a type that Congress sought to redress with the antitrust laws (“antitrust injury”); (4) the directness with which the alleged market restraint caused the asserted injury; (5) the speculative nature of the damages; and (6) the risk of duplicative recovery or complex apportionment of damages.

RSA Media, Inc. v. AK Media Group, Inc., 260 F.3d 10, 13–14 (1st Cir.2001) (quoting Serpa Corp. v. McWane, Inc., 199 F.3d 6, 9–10 (1st Cir.1999)). “Plaintiffs must show not only that they were injured as a result of the defendant's actions and that those actions constituted an antitrust violation, but also that their injury is the type of injury the antitrust violation would cause to competition.” Sterling Merchandising, Inc. v. Nestlé, S.A., 656 F.3d 112, 121 (1st Cir.2011) (emphasis in original). But “[c]ompetitors ... in the market where trade is allegedly restrained are presumptively the proper plaintiffs to allege antitrust injury.” Serpa, 199 F.3d at 10–11 (citing SAS of P.R., Inc. v. P.R. Tel. Co., 48 F.3d 39, 44–45 (1st Cir.1995)).

The counterclaim defendants focus on the antitrust injury factor, and assert that any injury is to PharmPix alone, and not to the market for PBM services. (Docket No. 56, p. 11). Focusing on a specious allegation related to the monopoly claim, which I will address shortly, they reason that “[t]he lack of specificity of PharmPix's allegations only constitutes an attempt to conceal the fact that the competitive market structure has not suffered any antitrust injury....” ( Id.). But at this stage, I am persuaded by...