IHS Dialysis Inc. v. Davita, Inc.
| Decision Date | 31 March 2013 |
| Docket Number | 12 Civ. 2468 (ER) |
| Parties | IHS DIALYSIS INC., IHS DIALYSIS OF MASSACHUSETTS, LLC, and IHS OF NEW YORK, INC., Plaintiffs, v. DAVITA, INC., Defendant. |
| Court | U.S. District Court — Southern District of New York |
Ramos, D.J.:
Plaintiffs IHS Dialysis, Inc., IHS Dialysis of Massachusetts, LLC, and IHS of New York, Inc. ("Plaintiffs" or "IHS") brought suit against Defendant Davita, Inc. ("Davita" or "Defendant"), pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15, alleging four causes of action: monopolization, attempted monopolization, and conspiracy to monopolize all in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; and conspiracy to restrain trade in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Doc. 9 ("Am. Compl.") ¶¶ 176-200.
Before the Court are Defendant's Motions to Dismiss the Amended Complaint, Doc. 11, and to Strike. Doc. 13. For the reasons set forth below, Defendant's Motion to Strike is DENIED, and Defendant's Motion to Dismiss is DENIED in part and GRANTED in part, with leave to replead.
This lawsuit concerns the market for outpatient dialysis services in certain defined areas of Massachusetts and New York in which the parties operate as competitors. Am. Compl. ¶¶ 2, 11-17. Plaintiffs allege that "[s]ince at least 2007, DaVita has engaged in an intentional andpersistent campaign to obtain, maintain, and enhance its market and, in some cases, monopoly power through its own anticompetitive conduct and by conspiring with others to engage in anticompetitive conduct." Id. ¶ 4. Plaintiffs generally allege that DaVita violated Sections 1 and 2 of the Sherman Act by engaging in five types of improper conduct: (1) entering into exclusive, long-term agreements with nephrologists and other referral sources, managed care companies, and pharmaceutical companies, to "lock-up" a significant number of patient referrals, to "lock-up" a significant number of covered lives, and to receive pharmaceutical products at "extremely favorable and, in some cases, predatory pricing [sic]," respectively, id. ¶¶ 127-56; (2) engaging in "inappropriate business conduct," including disparaging IHS, threatening current referral sources, patients and staff members, and requiring current employees to sign non-compete agreements, id. ¶¶ 80-102; (3) warehousing space and operating licenses, id. ¶¶ 157-63; (4) commencing baseless lawsuits and threatening to commence lawsuits against former employees, referral sources, managed care companies, pharmaceutical companies and competitors, id. ¶¶ 103-25; and (5) entering into a contract with NxStage that gives DaVita certain "exclusive rights to utilize the NxStage machine" for home-based dialysis ("HHD") in the relevant markets. Id. ¶¶ 164-75. Plaintiffs allege that DaVita undertook all of these actions for the purpose of preventing IHS and other competitors from "gaining a foothold" in the relevant markets, id. ¶¶ 80, 99, 128, and that DaVita's actions have resulted in a decrease in the quality of care in the relevant markets. Id. ¶¶ 5-7, 67-71.
"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim isfacially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly, 550 U.S. at 570). More specifically, the plaintiff must allege sufficient facts to show "more than a sheer possibility that a defendant acted unlawfully." Id. (citing Twombly, 550 U.S. at 556). However, the "flexible plausibility standard" is not a heightened pleading standard, In re Elevator Antitrust Litig., 502 F.3d 47, 50 (2d Cir. 2007), and "a complaint does not need detailed factual allegations" to survive a motion to dismiss. Twombly, 550 U.S. at 555.
The question on a Rule 12(b)(6) motion "'is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.'" Sikhs for Justice v. Nath, No. 10 Civ. 2940 (RWS), --- F. Supp. 2d ----, 2012 WL 4328329, at *15 (S.D.N.Y. Sept. 21, 2012) (quoting Villager Pond, Inc. v. Town of Darien, 56 F.3d 375, 378 (2d Cir. 1995)). "[T]he purpose of Federal Rule of Civil Procedure 12(b)(6) 'is to test, in a streamlined fashion, the formal sufficiency of the plaintiff's statement of a claim for relief without resolving a contest regarding its substantive merits,'" and without regard for the weight of the evidence that might be offered in support of the Ppaintiff's claims. Halebian v. Berv, 644 F.3d 122, 130 (2d Cir. 2011) (quoting Global Network Commc'ns, Inc. v. City of New York, 458 F.3d 150, 155 (2d Cir. 2006)). The Court therefore must ordinarily confine itself to the four corners of the complaint and look only to the allegations contained therein. Id. (citation omitted). When ruling on a motion to dismiss pursuant to Rule 12(b)(6), the court accepts all factual allegations in the complaint as true and draws all reasonable inferences in the plaintiff's favor. See Famous Horse Inc. v. 5th Ave. Photo Inc., 624 F.3d 106, 108 (2d Cir. 2010) (citation omitted); see also Twombly, 550 U.S. at 556 .
As an initial matter, the Court must address the structure and content of Defendant's motion papers. In support of its Motion to Dismiss the Amended Complaint in its entirety, Defendant asserts the following seven arguments: (1) there are no factual allegations to support Plaintiffs' proposed geographic market; (2) Plaintiffs have not alleged a shared, specific intent to monopolize the relevant market to state a Section 2 conspiracy claim; (3) Plaintiffs have not adequately alleged actionable "exclusive dealing claims," (4) Plaintiffs have not adequately plead claims for "predatory pricing/buying," (5) Plaintiffs have not adequately alleged a "disparagement claim," (6) Plaintiffs' allegations of threats do not support a "predatory hiring claim," and (7) Plaintiffs' allegations of warehousing licenses and lease sites, and of initiating and threatening to initiate lawsuits, are barred by the Noerr-Pennington doctrine. See Def.'s Mem. Law Supp. Mot. Dismiss, ("Def.'s Mem."), Doc. 12.
Defendant asserts that the relevant market argument applies to all of Plaintiffs' claims, and it is clear that Defendant's second argument is directed only at Plaintiffs' conspiracy to monopolize claim;1 however, Defendant's remaining arguments are not addressed to any particular element of any particular cause of action in the Amended Complaint. Indeed, some of Defendant's arguments barely even relate to Plaintiffs' allegations.
Although there are palpable deficiencies in the allegations in the Amended Complaint, Defendant's arguments, and the cases it cites in support, do not squarely and clearly addressthose deficiencies, or the essential elements of the four causes of action. Defendant's arguments are deficient in a number of other respects. Significantly, and as more fully detailed below, Defendant relies on extrinsic materials to contradict factual allegations in the Amended Complaint,2 cites to factually distinguishable cases, cases from outside this Circuit, and cases involving post-trial motions or motions for summary judgment, which are wholly inapplicable in the context of a Rule 12(b)(6) motion to dismiss, and simply ignores many of the allegations in the Amended Complaint. Many of the factual allegations ignored in its Motion to Dismiss papers are addressed in Defendant's Motion to Strike. See Def.'s Mem. Law Supp. Mot. Strike ("Def.'s Strike Mem."), Doc. 15; Def.'s Reply Mem. Further Supp. Mot. Strike ("Def.'s Strike Reply Mem."), Doc. 22. However, Defendant was not granted leave to file a motion to strike, and it appears from the content of Defendant's papers that the separately briefed "Motion to Strike" is simply an attempt to assert additional arguments in support of Defendant's Motion to Dismiss, and to evade the page limits for motions set by my Individual Practices, Indiv. Pracs. R. 2(b), and by Standing Order M10-468. See Doc. 2, 8-9. Such arguments are not properly before the Court and, therefore, Defendant's Motion to Strike is DENIED.
While the Amended Complaint is not a model of clarity or specificity, Defendant has not offered any basis for dismissing any of Plaintiffs' claims for failure to state a claim due to insufficient pleading. As a consequence of the foregoing, at this early stage of the litigation,except as set forth below, the Court is unable to conclude that Plaintiffs have not adequately alleged their claims. The Court now turns to an analysis of Plaintiffs' claims.
Section 2 makes it illegal to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations . . . ." 15 U.S.C. § 2. "While § 1 of the Sherman Act forbids contracts or conspiracies in restraint of trade or commerce, § 2 addresses the actions of single firms that monopolize or attempt to monopolize, as well as conspiracies and combinations to monopolize." Spectrum Sports Inc., v. McQuillan, 506 U.S. 447, 454 (1993). Here, Plaintiffs have asserted all three causes of action encompassed by Section 2.
To state a Section 2 claim of monopolization, a plaintiff must allege: "'(1) the possession of monopoly power in the...
To continue reading
Request your trial