Practice Perfect v. HAMILTON COUNTY PHARMACEUTICAL

• Decision Date: 03 October 1989
• Docket Number: No. C-1-87-228.,C-1-87-228.
• Citation: 732 F. Supp. 798
• Parties: PRACTICE PERFECT, INC., Plaintiff, v. HAMILTON COUNTY PHARMACEUTICAL ASSOC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

732 F. Supp. 798

PRACTICE PERFECT, INC., Plaintiff, v. HAMILTON COUNTY PHARMACEUTICAL ASSOC., et al., Defendants.

No. C-1-87-228.

United States District Court, S.D. Ohio, W.D.

October 3, 1989.

Kenneth G. Hawley, Cincinnati, Ohio, for plaintiff.

Alan C. Witten, Columbus, Ohio, for defendants.

ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

SPIEGEL, District Judge.

The plaintiff, Practice Perfect, Inc., brought this law suit against the Hamilton County Pharmaceutical Association, its president, and several of its trustees. The plaintiff's complaint alleges violations of sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 & 2), section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)), and various provisions of state statutory and common law. This matter is before the Court on defendants' motion for summary judgment on all counts of the complaint (doc. 25), the plaintiff's memorandum in opposition (doc. 31), and the defendants' reply (doc. 32). The defendants presented a number of grounds on which they argue they should be granted summary judgment, including the ground that the plaintiff after extensive discovery has failed to show that it suffered any injury as the result of the alleged wrongful acts of the defendants. This Court concludes that the plaintiff sustained no injury attributable to the actions of the defendants, and therefore is not entitled to the requested relief under either of its federal causes of action. Furthermore, upon the dismissal of both of the plaintiff's federal causes of action, this Court declines to retain jurisdiction over the plaintiff's state claims and dismisses those claims without prejudice.

FACTUAL AND PROCEDURAL BACKGROUND

The plaintiff, Practice Perfect, Inc., was incorporated in October of 1986 for the purpose of entering the business of prescription drug repackaging. Practice Perfect was formed by Joseph Thomas, Vincent Stitzel, Thomas Klocke, Richard Kugele, and William Richter, all of whom are pharmacists employed at the Veterans Administration Hospital in Cincinnati, Ohio. Practice Perfect planned to purchase drugs from a wholesaler, repackage them into standard dosage units, affix the appropriate labels, and then stock the drugs in the offices of physicians. The physicians would then dispense the drugs directly to their patients. The physicians would pay Practice Perfect two dollars above the wholesale cost for each repackaged item dispensed, and would be free to charge patients whatever price they wished.

By December of 1986, the plaintiff had obtained from the state of Ohio a license as a wholesale distributor of dangerous drugs and a license as a wholesale distributor of controlled substances, and had registered with the Food and Drug Administration as a repackager. In addition, the plaintiff had applied for, but failed to receive, a federal registration for distribution of controlled substances. The plaintiff had also contacted repackaging machine manufacturers regarding the prices of their machines, and had established procedures for complying with all relevant labeling requirements.

In December, the plaintiff also began to contact physicians about their possible interest in Practice Perfect. The plaintiff sent out approximately three hundred solicitation letters inviting interested physicians to contact them and scheduled an appointment to discuss how the physicians could benefit from Practice Perfect's proposed services. The letters stated that Practice Perfect's business would be operational in approximately three months and was dated December 13, 1986.

By January of 1987, the plaintiff had agreed on terms with Hale-Justis Drug Company for it to serve as the plaintiff's wholesale supplier. The plaintiff also began to be contacted, either through a response card that had been enclosed in the solicitations or by telephone, by physicians interested in learning more about Practice Perfect. Vincent Stitzel then began to meet with interested physicians in order to explain Practice Perfect's program to them.

By February of 1987, sixteen individuals or groups representing a total of thirty-one physicians had contacted Practice Perfect seeking more information. Following meetings with Vincent Stitzel, four of these physicians entered into written agreements to be supplied by Practice Perfect. Another three groups representing twelve physicians completed an inventory survey and returned it to the plaintiff. The plaintiff claims that the return of these inventory surveys constituted an agreement between these physician groups and Practice Perfect for the supply of drugs. However, at least one of these groups representing six physicians stated in a letter returned with the completed inventory survey that the survey was returned in order to gain "an idea of the cost of each drug to help us decide whether or not to utilize your service." The other physicians who had indicated an initial interest in Practice Perfect never entered into a supply agreement with the plaintiff nor did they return an inventory survey.

Meanwhile, the defendant, Hamilton County Pharmaceutical Association (HCPA), issued the January 1987 edition of its newsletter. The newsletter reprinted the first four paragraphs of Practice Perfect's solicitation letter, which contained a general description of the drug repackaging business. It omitted the final paragraph of the letter which contained a specific description of Practice Perfect's business. The newsletter stated that the plaintiff's letter had been sent to the HCPA by an area physician who had also sent the letter to the Ohio Medical Board. It also stated that the HCPA had forwarded a copy of the letter to the Ohio State Board of Pharmacy. The newsletter described the repackaging business as both legally and ethically questionable, and stated that the HCPA would follow developments and "take appropriate actions."

After the appearance of the January newsletter, the plaintiff contacted Hale-Justis Drug Company for instructions as to how to place an order. Joseph Thomas spoke to William Van Meter of Hale-Justis who told Thomas that he had seen the HCPA newsletter. According to Thomas, Van Meter informed him that several of Hale-Justis' larger accounts had complained about the company's decision to sell drugs to the plaintiff, and that due to this pressure he would be unable to supply drugs to Practice Perfect. Thomas also stated that Van Meter told him that he doubted any wholesale distributor in Cincinnati would agree to supply Practice Perfect. Van Meter, on the other hand, stated in his deposition that Hale-Justis decided not to supply the plaintiff for its own reasons unrelated to the HCPA newsletter. Shortly after Hale-Justis refused to serve as Practice Perfect's supplier, the plaintiff entered into an agreement for the supply of drugs with Amfac of Louisville, Kentucky on more favorable terms than those of the prior agreement with Hale-Justis.

On February 9, 1987, the five shareholders of Practice Perfect first discussed their involvement in that company with the Chief of Pharmacy Services at the Veterans Administration Hospital.

On February 20, 1987, the HCPA sent a letter to area physicians urging them to take "a strong stand against physician dispensing in general and the Practice Perfect, Inc. plan in particular." The letter stated that the HCPA had forwarded Practice Perfect's solicitation letter to both the Ohio State Medical Board and the State Board of Pharmacy, and that "both of these regulatory bodies share our concern and will investigate, thoroughly, Practice Perfect, Inc. and the physicians who may agree to participate in this program." The letter went on to state the basis for the investigation. Part of the stated basis was that "only a registered pharmacist or pharmacy intern under the personal supervision of a registered pharmacist may dispense a drug" under Ohio Rev.Code § 4729.28. The plaintiff alleges that the letter deliberately and misleadingly omitted the portion of the above statute that states that "nothing in this section is intended to prohibit physicians from dispensing drugs directly to their patients." However, the letter went on to discuss regulations that physicians who do dispense drugs must follow, a discussion that serves to negate any inference raised that physicians are barred from dispensing drugs under Ohio Rev.Code § 4729.28.

After the HCPA letter was distributed to area physicians, the plaintiff contends that further inquiries by physicians into Practice Perfect's business stopped, and that even those physicians who had already agreed to participate in Practice Perfect's program refused to respond to the plaintiff's phone calls. The doctors who actually entered into a written agreement with Practice Perfect, however, have stated in affidavits and depositions that they simply never again heard from the plaintiff after these events.

On February 27, 1987, Mr. Hammond, the Chief of Pharmacy Services at the Veterans Administration Hospital, informed the five shareholders of Practice Perfect that their involvement with the plaintiff created a conflict of interest with their employment at the hospital. Hammond ordered the five men to cease all activities on behalf of Practice Perfect and to divest themselves of all interest in the enterprise. By mid-March, all five shareholders signed and submitted statements that neither they nor Practice Perfect were purchasing drugs or soliciting physicians for participation in a physician dispensing program. They further stated that should Practice Perfect engage in either of these activities in the future, they would either divest themselves of their interest in Practice Perfect or discontinue their employment at the hospital.

On March 30, 1987, the plaintiff filed this law suit. At no time from the incorporation of Practice Perfect to the filing of this law suit did the plaintiff purchase drugs from any wholesaler or distribute them to any...