Pharmacychecker.Com, LLC v. Nat'l Ass'n of Boards of Pharmacy

• Decision Date: 30 March 2021
• Docket Number: No. 19-CV-7577 (KMK),19-CV-7577 (KMK)
• Citation: 530 F.Supp.3d 301
• Parties: PHARMACYCHECKER.COM, LLC, Plaintiff, v. NATIONAL ASSOCIATION OF BOARDS OF PHARMACY, et al., Defendants.
• Court: U.S. District Court — Southern District of New York

530 F.Supp.3d 301

PHARMACYCHECKER.COM, LLC, Plaintiff,

v.NATIONAL ASSOCIATION OF BOARDS OF PHARMACY, et al., Defendants.

No. 19-CV-7577 (KMK)

United States District Court, S.D. New York.

Signed March 30, 2021

Aaron Robert Gott, Esq., Alexandra Shear, Esq., Bona Law PC, Minneapolis, MN, New York, NY, Counsel for Plaintiff.

Brian E. Casey, Esq., Paul T. Olszowka, Esq., Barnes & Thornburg LLP, South Bend, IN, Chicago, IL, Counsel for National Association of Boards of Pharmacy.

Erik Thomas Koons, Esq., Jana Irina Seidl, Esq., Stephen Weissman, Esq., Timothy Patrick Singer, Esq., Baker Botts LLP, Washington, DC, Counsel for National Association of Boards of Pharmacy.

Rachel Johanna Adcox, Esq., Cristina Marie Fernandez, Esq., Jeny Maier, Esq., Axinn, Veltrop & Harkrider LLP, Washington, DC, Counsel for Alliance for Safe Online Pharmacies.

Barry Werbin, Esq., Nicholas Grant Olear Veliky, Esq., Herrick, Feinstein LLP, New York, NY, Counsel for Center for Safe Internet Pharmacies Ltd.

John Tyler Mills, Esq., Mercedes Colwin, Esq., Ryan James Sestack, Esq., Gordon Rees Scully Mansukhani LLP, New York, NY, Counsel for LegitScript LLC.

Justin Ward Lamson, Esq., Leslie Ellen John, Esq., Elizabeth Weissert, Esq., Jay N. Fastow, Esq., Ballard Spahr LLP, New York, NY, Philadelphia, PA, Counsel for Partnership for Safe Medicines, Inc.

OPINION & ORDER

KENNETH M. KARAS, United States District Judge:

Plaintiff PharmacyChecker.com ("Plaintiff") brings this Action against the National Association of Boards of Pharmacy ("NABP"), Alliance for Safe Online Pharmacies ("ASOP"), Center for Safe Internet Pharmacies Ltd. ("CSIP"), LegitScript LLC ("LegitScript"), and Partnership for Safe Medicines, Inc. ("PSM"; collectively "Defendants"), alleging that Defendants unlawfully conspired to restrain trade in violation of § 1 of the Sherman Act, 15 U.S.C. § 1, and that NABP falsely advertised or promoted in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125. (Am. Compl. ("AC") (Dkt. No. 82).) Before the Court are the following Motions: Defendants’ Joint Motion to Dismiss (the "Joint Motion"), (Joint Not. of Mot. To Dismiss by Defs. ("Joint Mot.") (Dkt. No. 100)), PSM's Motion to Dismiss (the "PSM Motion"), (Def. PSM's Mot. To Dismiss the AC as to It with Prejudice ("PSM Mot.") (Dkt. No. 97)), ASOP's Motion to Dismiss (the "ASOP Motion"), (Not. of Def. ASOP's Mot. To Dismiss the AC ("ASOP Mot.") (Dkt. No. 104)), and LegitScript's Motion to Dismiss (the "LegitScript Motion"; collectively, the "Motions"), (Not. of Mot. ("LS Mot.") (Dkt. No. 119)). The Joint Motion, PSM Motion, and ASOP Motion are brought pursuant to Federal Rule of Civil Procedure 12(b)(6). (Joint Mot.; PSM Mot.; ASOP Mot.) The LegitScript Motion is brought pursuant to Rules 12(b)(2) and 12(b)(6). (LS Mot.) For the reasons that follow, the LegitScript Motion is granted, the Joint Motion and the ASOP Motion are denied, and the PSM Motion is granted in part and denied in part.

I. Background

A. Factual Background

The following facts are drawn from Plaintiff's Amended Complaint ("AC") and the documents it references, and are taken as true for the purpose of resolving the instant Motions.

Plaintiff is a Limited Liability Company organized under the laws of New York that offers an accreditation program for pharmacies and provides drug price comparison information. (AC ¶ 5.) Unlike its competitors in these industries, Plaintiff offers pharmacy accreditation to, and provides comparative drug price information for, pharmacies operating worldwide. (Id. ¶¶ 27, 33.) However, Plaintiff's business is not limited to certifying and providing price information for foreign pharmacies. For example, Plaintiff also accredits U.S. online pharmacies, and includes these U.S. online pharmacies in its price comparisons. (Id. ¶¶ 40, 43.) The AC contains no allegations regarding the size of Plaintiff's foreign accreditation and price comparison businesses as compared to their U.S. equivalents.

While Plaintiff does not itself sell or import prescription drugs, it claims that the personal import of drugs from pharmacies outside the U.S. "remains under some circumstances in a legal gray area." (Id. ¶ 24.) While foreign drug imports are generally prohibited due to U.S. labeling requirements, In re Canadian Imp. Antitrust Litig. , 470 F.3d 785, 789 (8th Cir. 2006), (see also Decl. of Erik T. Koons in Supp. of Joint Mot. ("Koons Decl.") Ex. C ("Google Non-Prosecution Agreement") 1 (Dkt. No. 102-1, at 81) ("Except under very limited circumstances ... it is unlawful for pharmacies outside the United States to ship prescription drugs to customers in the United States.")), Plaintiff identifies a handful of purported exceptions where personal imports may be permitted, (AC ¶ 57). Defendants allow that personal imports "might" be permitted in certain, limited cases. (Mem. Of Law in Supp. of Joint Mot. ("Defs.’ Mem.") 4 (Dkt. No. 101).) The AC makes no allegations regarding the conditions or legality of any foreign drug imports made by users of Plaintiff's pharmacy accreditation and drug price comparison services. (See generally AC.)

NABP is an association of state boards of pharmacy. (Id. ¶ 6.) It competes with Plaintiff in the pharmacy accreditation market through its Verified Internet Pharmacy Practice Sites ("VIPPS") program, its ".pharmacy" Verified Websites program, and its Internet Drug Outlet Identification Program. (Id. )

LegitScript is a Limited Liability Company organized under the laws of Oregon offering verification and monitoring services for online pharmacies. (Id. ¶ 9.) Like NABP, LegitScript also competes with Plaintiff in the pharmacy accreditation market. (Id. )

ASOP is an organization that represents the Pharmaceutical Researchers and Manufacturers of America ("PhRMA") to address the problem of online drug sellers and counterfeit drugs. (Id. ¶ 7.) NABP regularly participates in ASOP's meetings. (Id. ¶ 67(a).) One of ASOP's members, GoodRx, competes with Plaintiff in the market for comparative drug price information. (Id. ¶ 7.)

PSM is a nonprofit organization that has orchestrated a campaign against foreign drug imports and often works with PhRMA. (Id. ¶ 10.) PSM is an observer to ASOP, and regularly participates in ASOP meetings. (Id. ¶¶ 10, 67(a).)

CSIP is an organization that includes internet commerce gatekeepers, including Google, Microsoft, Facebook, Mastercard, and UPS. (Id. ¶ 8.) It was organized and founded at least in part by ASOP and LegitScript. (Id. )

In December 2018, NABP added Plaintiff's website and blog to its Not Recommended Sites list. (Id. ¶¶ 87, 90.) CSIP maintains a similar list, which is recognized by NABP as adhering to NABP's standards. (Id. ¶ 94.) In June and July of 2019, CSIP ran targeted online ads against Plaintiff. (Id. ¶ 93.) On July 21, 2019, users of the Bing search engine began seeing a red caution shield and a warning box when clicking on search results for pages from Plaintiff's website and blog. (Id. ¶ 95.) This change was driven by CSIP's "Principles of Participation," under which its members have agreed to use data-sharing tools to detect and target suspected illegitimate pharmacy websites. (Id. ¶¶ 75, 93.) The Bing warning caused Plaintiff to lose 76% of its web traffic from Bing. (Id. ¶ 95.)

In addition, LegitScript or NABP allegedly convinced one vendor to list Plaintiff's website as "not safe," "malicious," or "pornography." (Id. ¶ 84.) In 2015, NABP, CSIP, ASOP, and LegitScript published articles disparaging Plaintiff, and in 2018 PSM did the same. (Id. ¶ 85.) NABP, CSIP, ASOP, LegitScript, and various companies that are members of PSM's collaborator PhRMA also jointly created the ".pharmacy" domain to serve a gatekeeping function. (Id. ¶¶ 10, 80, 96.) As a result of these actions, since March 2019, Plaintiff's site traffic from organic search results has dropped more than 78%, and its monthly click-through revenue has dropped more than 77%. (Id. ¶ 109.)

Plaintiff alleges that these efforts, collectively, are a group boycott, which attempts to prevent Plaintiff from competing in the global markets for online pharmacy verification and comparative drug price information. (Id. ¶¶ 28, 30–36, 104.) Defendants have referred explicitly to the goal of coordinating their approach to online pharmacies via email, via press release, and in meetings. (See id. ¶¶ 69–73.) Further, Defendants share close business relationships, including common founders, (id. ¶¶ 67, 74), interlocking membership in organizations, (id. ¶¶ 7–8, 10, 68), attending the same meetings, (id. ¶¶ 7–8, 67(a)), and promotion of each other's products and activities, (id. ¶¶ 68, 77, 95).

Plaintiff separately alleges that NABP has violated the Lanham Act. NABP's website claims that sites on its Not Recommended List are unsafe and illegal, including Plaintiff's website and blog. (Id. ¶¶ 119–122.) According to Plaintiff, these claims are false and misleading. (Id. ¶¶ 126–32.) The purported purpose of these claims is to steer search engines and consumers away from Plaintiff's site and towards sites of NABP's affiliates, which fund NABP and its initiatives. (Id. ¶¶ 124, 134–35.) This has deceived or misled consumers, search engines, and pharmacy websites into not using Plaintiff's website, (id. ¶¶ 136–38), causing the harm discussed above.

B. Procedural Background

Plaintiff filed its Complaint on August 13, 2019. (Compl. (Dkt. No. 1).) The next day, Plaintiff moved for a preliminary injunction, requesting that the Court order NABP to remove Plaintiff's website and blog from its Not Recommended Sites list; order NABP to inform all parties to which it had distributed the Not Recommended Sites list that Plaintiff was removed; and order CSIP to accept the revised list, inform its members, and require its members to incorporate this revision into their implementation of the list. (Pl.’s Not. of Mot. and Mot. For Prelim. Inj. (Dkt. No. 17); Pl.’s Corrected Mem. of Law in Supp. of Mot. For Prelim. Inj. (Dkt. No. 33); Aff....