Medical Supply Chain, Inc. v. Neoforma, Inc.

• Decision Date: 07 March 2006
• Docket Number: No. Civ.A. 05-2299-CM.,Civ.A. 05-2299-CM.
• Citation: 419 F.Supp.2d 1316
• Parties: MEDICAL SUPPLY CHAIN, INC., Plaintiff, v. NEOFORMA, INC., et al., Defendants.
• Court: U.S. District Court — District of Kansas

419 F.Supp.2d 1316

MEDICAL SUPPLY CHAIN, INC., Plaintiff, v. NEOFORMA, INC., et al., Defendants.

No. Civ.A. 05-2299-CM.

United States District Court, D. Kansas.

March 7, 2006.

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Ira Dennis Hawver, Ozawkie, KS, for Plaintiff.

Janice Vaughn Mock, Sophie N. Froelich, Stephen N. Roberts, Nossaman, Guthner, Knox & Elliott, LLP, San Francisco, CA, John K. Power, Husch & Eppenberger, LLC, Jonathan H. Gregor, Mark A. Olthoff, Kathleen A. Hardee, Shughart Thomson & Kilroy, PC, Kansas City, MO, Andrew M. Demarea, Shughart Thomson & Kilroy, Overland Park, KS, for Defendants.

MEMORANDUM AND ORDER

MURGUIA, District Judge.

On March 9, 2005, plaintiff Medical Supply Chain, Inc. filed the above-captioned case in the United States District Court for the District of Western Missouri, case number 05-2010-CV-W-ODS. Plaintiff brought suit against Neoforma, Inc., Robert J. Zollars, Volunteer Hospital Association ("VHA"), Curt Nonomaque, University Healthsystem Consortium, Robert J. Baker, U.S. Bancorp NA, U.S. Bank National Association, Jerry A. Grundhofer, Andrew Cesare,¹ Piper Jaffray Companies, Andrew S. Duff, Shughart Thomson & Kilroy, P.C.,² and Novation, LLC. Plaintiff's 115 page complaint alleges sixteen counts including claims for price restraint under the Sherman Act, restraint of trade and monopolization under both federal and Missouri law, conspiracy, tortious interference with contract or business expectancy, breach of contract, breach of fiduciary duty, fraud, prima facie tort, and claims under RICO and the USA PATRIOT Act.

On June 15, 2005, Judge Ortrie D. Smith of the Western District of Missouri granted defendants' Motions to Transfer the case to the District of Kansas, citing this district court's experience with "the almost identical previous lawsuit" and the interests of justice. (Doc. 26, at 2).

Each group of defendants have filed a motion to dismiss, and two groups of defendants have filed renewed motions after the case was transferred, resulting in seven motions to dismiss. The motions to dismiss pending before the court are defendant Robert Zollars' Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 2); Defendant Neoforma, Inc.'s Motion to Dismiss, [sic] Complaint, or Alternatively to Require Amendment, Pursuant to F.R.C.P. Rules 8 and 9 (Doc. 4); Defendants U.S. Bancorp, U.S. Bank National Association, Piper Jaffray Companies, Jerry A. Grundhofer, Andrew Cesare and Andrew S. Duffs' Motion to Transfer, Dismiss and/or Strike (Doc. 6); Defendants Curt Nonomaque and Robert Baker's Motion to Dismiss Plaintiffs Complaint for Lack of Personal Jurisdiction and for Failure to State a Claim (Doc. 11); Defendant Shughart Thomson & Kilroy, P.C.'s Motion to Transfer, Dismiss and/or Strike (Doc. 13); Defendants U.S. Bancorp, U.S. Bank National Association, Piper Jaffray Companies, Jerry A. Grundhofer, Andrew Cesare and Andrew S. Duffs' Renewed Motion to Dismiss and/or Strike (Doc. 32); and Novation, LLC, VHA Inc., University Health-system Consortium, Robert Baker and Curt Nonomaque's Renewed Motion to Dismiss Complaint for Failure to State a Claim (Doc. 34).

Additional motions before the court are defendants U.S. Bancorp, U.S. Bank National Association, Piper Jaffray Companies, Jerry A. Grundhofer, Andrew Cesare and Andrew S. Duffs' Motion for Sanctions (Doc. 22); Defendants' Motion to Stay Rule 26(f) Conference and Discovery (Doc. 24); plaintiff's Motion for Reconsideration of Order Transferring Venue (Doc. 28); Novation, LLC, VHA, University Healthsystem Consortium, Robert Baker and Curt Nonomaque's Motion for Sanctions (Doc. 36); plaintiff's Motion to Strike Defendants' Renewed Motion to Dismiss and/or Strike (Doc. 38); plaintiff's Motion to Consolidate Under Rule 42 (Doc. 39); plaintiff's Motion to Require Consolidation Arguments to be in the Form of Pleadings on the Record and Notice of Threat of Unlawful Sanctions (Doc. 42); plaintiff's Motion to Strike Novation Defendants' Renewed Motion to Dismiss (Doc. 43); plaintiffs Motion for Clarification of Order in Case No. 03-2324 (Doc. 45); First Plaintiffs Motion for Partial Summary Judgment Under F.R. Civ. P. Local Rule 56.1 (Doc. 46); plaintiff's Motion for Leave to Join Additional Defendants Under Fed. R.Civ.P. 29(a) (Doc. 49); plaintiff's Motion to Substitute Plaintiff Under F.R.C.P. Rules [sic] 17(a), 15(a) and 25(a) (Doc. 56); plaintiff's Motion to Substitute Defendant Under F.R.C.P. Rules [sic] 17(a) (Doc. 57); and Novation, LLC, VHA Inc., University Healthsystem Consortium, Robert Baker and Curt Nonomaque's Motion to Set Oral Hearing on Motion to Dismiss (Doc. 76).

I. Background

A. Bret D. Landrith

Plaintiff's counsel for all of the pending motions before the court, Bret D. Landrith, withdrew as counsel for plaintiff on January 30, 2006 after being disbarred from the practice of law in the state of Kansas on December 9, 2005 for violating Kansas Rules of Professional Conduct relating to competence, meritorious claims, candor toward the tribunal, fairness to opposing parties and counsel, respect for rights of third persons, and misconduct. See In re Landrith, 124 P.3d 467, 485-86 (Kan.2005). On February 7, 2006, Ira Dennis Hawver entered his appearance on behalf of Medical Supply Chain, Inc.

B. Prior Relevant Cases

Plaintiff has brought two other cases in this court that are relevant to the court's analysis. The first, captioned Medical Supply Chain, Inc. v. U.S. Bancorp, NA, et al., 02-2539-CM, 2003 WL 21479192 (D.Kan.2003) ("Medical Supply I"), was filed on October 22, 2002 against defendants U.S. Bancorp, NA; US Bank Private Client Group, Corporate Trust, Institutional Trust and Custody, and Mutual Fund Services, LLC, a subsidiary of U.S. Bancorp; Piper Jaffray; Andrew Cesare; Susan Paine; Lars Anderson; Brian Kabbes; and Unknown Healthcare Supplier. Plaintiff contended these defendants engaged in conduct violating (1) the Sherman Antitrust Act; (2) the Clayton Antitrust Act; and (3) the Hobbs Act. Plaintiff also alleged defendants (4) "fail[ed] to properly train [their] employees on the USA PTRIOT Act or to provide a compliance officer"; (5) misused "authority and excessive use of force as enforcement officers under the USA PATRIOT Act"; and (6) violated "criminal laws to influence policy under section 802 of the USA PATRIOT Act." The complaint further charged defendants with (7) misappropriation of trade secrets under state law; (8) tortious interference with prospective contracts; (9) tortious interference with contracts; (10) breach of contract; (11) promissory estoppel; (12) fraudulent misrepresentation; and (13) violation of the covenant of good faith and fair dealing. Plaintiff sought over $943 million in damages and declaratory relief.

On June 16, 2003, this court granted defendants' motions to dismiss for failure to state any claims upon which relief could be granted and dismissed the case. Medical Supply I, 2003 WL 21479192, at *9 (D.Kan. June 16, 2003). When discussing plaintiff's USA PATRIOT Act claims, the undersigned judge advised Mr. Landrith to "take greater care in ensuring that the claims he brings on his clients' behalf are supported by the law and the facts." Id. at *6. Furthermore, with regard to the same claims, the undersigned judge noted that "the court finds plaintiffs allegation so completely divorced from rational thought that the court will refrain from further comment until such time as federal criminal proceedings are commenced, if indeed they ever are." Id. at *8. On November 8, 2004, the Tenth Circuit affirmed the district court's dismissal, and ordered plaintiff to show cause why he should not be sanctioned for filing a frivolous appeal pursuant to Fed. R.App. P. 38. Medical Supply I, 112 Fed.Appx. 730, 731-32 (10th Cir.2004). On December 30, 2004, the undersigned judge assessed attorney fees and double costs as a sanction against Mr. Landrith. Defendants were awarded $23,956 in attorney fees. Medical Supply I, 2005 WL 2122675, at *1 (D.Kan. May 13, 2005).

The second case brought by plaintiff in this court, captioned Medical Supply Chain, Inc. v. General Electric Company, et al., case number 03-2324-CM ("Medical Supply II"), was filed on June 18, 2003. Defendants included General Electric Company, General Electric Capital Business Asset Funding Corporation, GE Transportation Systems Global Signaling, LLC, and Jeffrey Immelt. Plaintiffs amended complaint alleged violations of the Sherman Act, the Robinson—Patman Act, and various state law claims. Specifically, plaintiff alleged that it

suffered antitrust injury from the defendants' breach of a written contract to buy out the remainder of a lease and provide financing for Medical Supply's entry into the hospital supply market. This contract was a unique credit agreement and an essential facility required for entry into the e-commerce market for hospital supplies.

Plaintiff further alleged that "GE founded a cartel or trust with its horizontal and vertical competitors, centered around an electronic marketplace that now has over 80% of the hospital e-commerce market," and that "GE's refusal to deal and group boycott, preventing Medical Supply's entry into a market GE has monopoly power in[,] is a violation of the Sherman and Clayton Antitrust Acts."

On January 29, 2004, the undersigned judge granted defendants' motions to dismiss, but opted not to impose Rule 11 sanctions against plaintiff. Medical Supply II, 2004 WL 956100, at *5 (D.Kan. Jan.29, 2004). In granting defendants' motions to dismiss, the court noted that "at the most fundamental level, plaintiffs antitrust claims fail." Id. at *3. On July 26, 2005, the Tenth Circuit affirmed the district court's dismissal of plaintiffs complaint, but reversed and remanded on the issue of sanctions against plaintiff, finding that "at least [plaintiffs] claims against Jeffrey Immelt in his individual capacity were frivolous in...