In re Rotavirus Vaccines Antitrust Litig.
| Decision Date | 20 November 2020 |
| Docket Number | CIVIL ACTION NO. 18-CV-1734 (Consolidated) |
| Parties | IN RE ROTAVIRUS VACCINES ANTITRUST LITIGATION |
| Court | U.S. District Court — Eastern District of Pennsylvania |
This consolidated putative antitrust class action is once again before this Court on the renewed Motion of Defendant Merck Sharp & Dohme Corp. ("Merck") to compel each individual plaintiff to arbitration and to stay these proceedings pending those arbitrations and Plaintiffs' counter Motion for Summary Judgment as to Arbitrability. For the reasons which we explain in the pages which follow, Defendant's Motion shall be denied and Plaintiffs' motion will be granted.
The instant motion has been returned to us from the Third Circuit following Merck's appeal from our January 23, 2019 Memorandum and Order denying its request to compel this matter to be arbitrated on the grounds that we improperly applied the summary judgment standard in evaluating the relevant contracts and membership agreements and erred in finding that Merck had failed to meet its burden of showing an agency relationship. In reversing and remanding this matter, the Third Circuit determined that application of the summary judgment standard to this motion was premature and held that limited discovery on the issue of arbitrability was appropriate. That discovery has since concluded and we now consider Defendant's motion to compel arbitration for the second time together with Plaintiffs' motion for summary judgment as to arbitrability.
We begin by repeating our recitation of the salient facts as they have been alleged in the Consolidated Amended Class Action Complaint filed by Sugartown Pediatrics, LLC and Schwartz Pediatrics S.C.1 In substance, Plaintiffs "challenge[] Merck's anticompetitive vaccine bundling scheme whereby Merck leverages its monopoly power in multiple pediatric vaccine markets to maintain its monopoly power in the Rotavirus Vaccine Market and, consequently, to charge supracompetitive prices to purchasers of its rotavirus vaccines." (Consol. Am. Compl., ¶2). The essence of these averments is that as to its RotaTeq Rotavirus vaccine, instead of lowering the price which it was charging when it held 100% of the Rotavirus market, Merck responded to the entry of GlaxoSmithKline's competing vaccine, Rotarix, by adding an"exclusionary RotaTeq Bundled Loyalty Condition to its [buying] contracts, thereby bundling RotaTeq with its other pediatric vaccines." (Consol. Am. Compl., ¶s112, 114-115). According to Plaintiffs, in so doing, Merck penalized any of its customers who would buy Rotarix from GSK by forcing them to pay substantially higher prices for all of the vaccines in the Merck Bundle, including those for which Merck is the sole seller. (Consol. Am. Compl., ¶116). Plaintiffs contend that they suffered anti-trust injury because although they, like most physicians, practices and hospitals, purchase the vaccines which they administer to their patients directly from Merck, the prices which they pay for those vaccines are discounted as a consequence of their memberships in Physician Buying Groups ("PBGs"). Plaintiffs' complaint avers that Merck has effectively co-opted the PBGs to impose and enforce its anticompetitive and exclusionary conduct with the result that they and the proposed class members have repeatedly paid artificially inflated prices for rotavirus vaccines since Rotarix entered the market and continuing through the present. (Consol. Am. Compl., ¶s 117-120, 145-149).
By the renewed motion that is now before us, Merck repeats its request to stay this matter and compel Plaintiffs to submit its claims to arbitration on the basis of arbitration clauses contained within Merck's contracts with the Physician BuyingGroups through which Plaintiffs purchased their vaccines.2 Those clauses are virtually identical in all of the contracts at issue, are found at Section 9.10 of the contracts and read as follows:
Any controversy, claim or dispute arising out of or relating to the performance, construction, interpretation or enforcement of this Agreement shall, if not resolved through negotiations between the parties, be submitted to mandatory binding arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. Sec. 1, et. seq.
In response to the renewed motion to compel, Plaintiffs reiterate that this matter should not be submitted to arbitration because they were not signatories to any agreements directly with Merck and the separate membership agreements which they entered into with the Physician Buying Groups did not contain any such clauses requiring submission of any of their disputes to arbitration. Because discovery on the matter of arbitrability has now closed and, according to Plaintiffs, the record on this issue clearly demonstrates that they are entitled as a matter of law tothe entry of judgment in their favor decreeing that this matter should proceed to be adjudicated on the merits in this court, Plaintiffs also seek the entry of an order granting their motion.
Under Fed. R. Civ. P. 56(a), any party may move for summary judgment on any claim or defense or any part of a claim or defense and judgment is appropriately entered "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Further, to be deemed "genuine" or "material," "[o]nly disputes over facts that might affect the outcome of the suit under governing law will properly preclude the entry of summary judgment..." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510, 91 L. Ed.2d 202 (1986). Thus, "[f]actual disputes that are irrelevant or unnecessary will not be counted." Id. Stated otherwise, "[a] genuine dispute exits 'if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" In re Tribune Media Co., 902 F.3d 384, 392 (3d Cir. 2018) (quoting Anderson, supra.); Stone v. Troy Construction, LLC, 935 F.3d 141 (3d Cir. 2019).
A "judge's function" in evaluating a motion for summary judgment is not "to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issuefor trial." Salazar-Limon v. City of Houston, 137 S. Ct. 1277, 1280 (2017) (quoting Anderson, 477 U.S. at 249). "In so doing, the court must 'view the facts and draw reasonable inferences in the light most favorable to the party opposing the motion.'" Id, (quoting Scott v. Harris, 550 U.S. 372, 378, 127 S. Ct. 1769, 167 L. Ed.2d 686 (2007) and United States v. Diebold, 369 U.S. 654, 655, 82 S. Ct. 993, 8 L. Ed.2d 176 (1962)). Thus, in order to survive summary judgment, an opposing party must show that "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249.
In turn, the procedures governing motions and/or petitions to arbitrate in the federal courts are outlined in Sections 3 and 4 of the Federal Arbitration Act, 9 U.S.C. Section 1, et. seq. Section 3 provides for a stay of proceedings where an issue is referable to arbitration and reads:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
Section 4 applies when a party fails and/or refuses to arbitrate and states the following:
A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28 in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement. Five days' notice in writing of such application shall be served upon the party in default. Service thereof shall be made in the manner provided by the Federal Rules of Civil Procedure.... The court shall hear the parties, and, upon being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue, the court shall make an order directing the parties to proceed to arbitration in accordance with the terms of the agreement. The hearing and proceedings, under such agreement, shall be within the district in which the petition for an order directing such arbitration is filed. If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose. If the jury find that no agreement in writing for arbitration was made or that there is no default in proceeding thereunder, the proceeding shall be dismissed. If the jury find that an agreement for arbitration was made in writing and that there is a default in...
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