# Verax Biomedical Inc. v. American National Red Cross

> District Court, D. Massachusetts · January 19, 2024

URL: https://www.frixlaw.com/law-library/cases/10201850

## Case

- **Court:** District Court, D. Massachusetts
- **Decided:** January 19, 2024
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

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- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10201850

## How later opinions describe it (automated extraction)

- holding that a federal grantee was not an agency under the Freedom of Information Act
- holding that under the Due Process Clause, Amtrak is not an “autonomous private enterprise” due to its “unique features and its significant ties to the Government”

## Opinion text

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
___________________________________
)
VERAX BIOMEDICAL INC., )
)
Plaintiff, )
) Civil Action
v. ) No. 23-10335
)
AMERICAN NATIONAL RED CROSS, )
)
Defendant. )
______________________________ )

MEMORANDUM AND ORDER
January 19, 2024
Saris, D.J.
INTRODUCTION
Defendant American National Red Cross (“ARC”) is the largest
supplier of blood platelets in the United States. Platelets are
used to treat patients with cancer, blood disorders, critical
injuries, and major surgeries. But platelets are susceptible to
bacterial contamination, which can cause serious side effects in
transfusion recipients. In the past, ARC sold platelets to
hospitals, which then separately employed services to mitigate the
risk of platelets becoming infected (“mitigation services”). The
United States Food and Drug Administration (“FDA”) has endorsed
the safety and effectiveness of multiple mitigation services.
Plaintiff Verax Biomedical Inc. (“Verax”) manufactures one such
mitigation service, a test called PGDprime1 that detects bacterial
growth.
In July 2020, ARC announced its plan to pretreat all platelets
it sold using Cerus Corporation’s INTERCEPT Blood System, an FDA-
approved pathogen reduction treatment. Verax’s PGDprime can be
used with other mitigation services, but not with INTERCEPT. Verax

now sues ARC for allegedly leveraging its power in the market for
platelets to monopolize the market for mitigation services, in
violation of the Sherman Act (Counts I-III). Verax also alleges
that ARC made false and disparaging statements about PGDprime to
Verax’s customers, in violation of state law (Counts IV-VI). ARC
moves to dismiss all counts pursuant to Fed. R. Civ. P. 12(b)(6).
After a hearing, the Court ALLOWS IN PART and DENIES IN PART ARC’s
motion (Dkt. 18).
BACKGROUND
Drawing all inferences in favor of Verax, the Court accepts
the following factual allegations from the complaint as true.

I. Blood Platelets
Platelets are “cell fragments in blood that bind together to
form clots, which stop bleeding and repair damaged blood vessels.”
Dkt. 1 at 5. The human body naturally produces its own platelets,
but some patients “need recurring platelet transfusions because

1 Stylized as “PGDprime.” See, e.g., Dkt. 1 at 4.
their illnesses prevent or reduce the formation of platelets[,] or
degrade the effectiveness” of the platelets. Id. at 6. Hospitals
purchase platelet “doses” -- bags each containing enough platelets
for a single transfusion -- from “blood centers” that collect and
process platelets from unpaid volunteers. Id.
The national market for platelets is “severely supply

constrained.” Id. at 7. This is partly because extracting a donor’s
platelets is more intensive than collecting other blood products.
Drawing platelets from a single donor takes around three hours and
yields only one to three doses. Platelets are scarce also because
they are susceptible to bacterial contamination that renders them
unsafe for transfusion. This gives them a short shelf-life once
harvested. Moreover, the onset of the COVID-19 pandemic led to a
ten-percent decline in platelet donations. ARC has called the
current shortage of platelets and other blood products a “national
blood crisis.” Id.
II. Bad Blood

Because platelets are prone to bacterial contamination, FDA
regulations require “[b]lood collection establishments and
transfusion services [to] assure that the risk of bacterial
contamination of platelets is adequately controlled using FDA
approved or cleared devices or other adequate and appropriate
methods found acceptable for this purpose by FDA.” 21 C.F.R.
§ 606.145(a) (2015). In September 2019, the FDA published
nonbinding guidance listing mitigation services compliant with 21
C.F.R. § 606.145(a). See U.S. Food & Drug Admin., Bacterial Risk
Control Strategies for Blood Collection Establishments and
Transfusion Services to Enhance the Safety and Availability of
Platelets for Transfusion: Guidance for Industry (2019) (“2019
Guidance”). The 2019 Guidance recommends mitigation services

including Pathogen Reduction Treatment (“PRT”), which is a
chemical and light treatment that inhibits bacterial growth, and
Large Volume Delayed Sampling (“LVDS”), Primary Culture, and Rapid
Secondary Testing, which are bacterial testing protocols. Id. at
5-8. Notably, the FDA endorses PRT and LVDS as “single-step
strateg[ies],” meaning that applying either one on its own
satisfies the FDA’s regulations and renders platelets safe for
transfusion within a certain timeframe. Id. at 5. By contrast, the
2019 Guidance lists Rapid Secondary Testing as half of a “two-step
strategy,” meaning that it needs to be used in conjunction with
LVDS or Primary Culture to render platelets safe and FDA-compliant.

The FDA does not endorse using Rapid Secondary Testing together
with PRT. See generally id. at 5-8.
In December 2020, the FDA updated the 2019 Guidance to extend
the deadline for implementing its recommendations until October
2021. See U.S. Food & Drug Admin., Bacterial Risk Control
Strategies for Blood Collection Establishments and Transfusion
Services to Enhance the Safety and Availability of Platelets for
Transfusion: Guidance for Industry (2020) (“2020 Guidance”). “The
FDA has expressed no preference” among its recommended mitigation
services. Dkt. 1 at 9. Nevertheless, mitigation services differ in
price and in their effects on platelet quality, platelet shelf-
life, “dose, availability[,] and other factors that could affect
clinical utility.” Id. at 10; 2020 Guidance at 5-8.

III. Parties
Verax is a corporation with its principal place of business
in Marlborough, MA. Verax develops, validates, and commercializes
FDA-cleared tests for detecting bacterial growth in platelets.
Verax’s products include PGDprime, a Rapid Secondary Test that it
sells to hospitals. PGDprime “takes only three minutes to perform,”
“generates results in about thirty minutes,” “uses only a nominal
sample of each platelet dose,” “has no adverse impact on platelet
quality or efficacy,” results in platelets with a seven-day shelf-
life, and costs only $25 per dose. Dkt. 1 at 12-13.
ARC is a federally chartered nonprofit corporation with its

principal place of business in Washington, D.C. It was founded in
1881, reincorporated in 1893, and given its first federal charter
in 1900. Am. Nat’l Red Cross v. S.G., 505 U.S. 247, 250 (1992). By
statute, ARC is responsible for “provid[ing] volunteer aid in time
of war to the sick and wounded of the Armed Forces” pursuant to
the United States’s obligations under the Geneva Convention and
other treaties. 36 U.S.C. § 300102(1). It is also tasked with
“carry[ing] out a system of national and international relief in
time of peace, and . . . apply[ing] that system in mitigating the
suffering caused by . . . great national calamities.” Id.
§ 300102(4). Among other activities, ARC “collects free donated
platelets at its blood centers” and sells those platelets to
hospitals across the country. Dkt. 1 at 7. ARC is “the largest

supplier of platelets in the United States,” accounting for “more
than 40% of all platelets sold” in the country. Id. It is “the
sole supplier of platelets to many hospitals and in some regions
in the United States.” Id.
In 2007, Congress added language to ARC’s statutory charter
describing it as “a Federally chartered instrumentality of the
United States.” See The American National Red Cross Governance
Modernization Act of 2007, Pub. L. No. 110-26, § 3(1), 121 Stat.
103 (2007) (codified at 36 U.S.C. § 300101(a)) (“Modernization
Act”). In the Modernization Act, which amended the charter,
Congress stated that ARC “is and will remain a Federally chartered

instrumentality” and that ARC has “the rights and obligations
consistent with that status.” Id. §§ 2(b)(4)-(5). Since 1905, ARC’s
charter has allowed it to “sue and be sued.” 36 U.S.C.
§ 300105(a)(5); see also 36 U.S.C. § 2 (1905).
IV. ARC’s Policy Change
Prior to July 2020, ARC sold both platelets treated with PRT
and so-called “untreated” platelets “that had been tested with
either a Primary Culture or LVDS” but not treated with PRT. Dkt. 1
at 13. ARC’s untreated platelets were “compatible with multiple
different bacteria mitigation services,” including Verax’s less
expensive PGDprime, so hospitals buying platelets from ARC could
choose which mitigation services to use and from whom to purchase
them. Id.

In July 2020, ARC announced plans to stop selling untreated
platelets and to perform PRT on all platelets prior to sale. ARC
entered an exclusive dealing contract with Cerus Corporation
(“Cerus”), which produces the INTERCEPT Blood System, the only
FDA-approved PRT technology for platelets. Dkt. 1 at 10, 16. Per
their contract, ARC has agreed to sell only platelets treated with
INTERCEPT to hospitals. ARC has indicated that it will fully
transition to selling only platelets treated with INTERCEPT by
some point in 2023.
PRT technologies like INTERCEPT “result[] in the loss of
approximately 10-15% of the platelet product,” “degrade[]

platelets, rendering them less efficacious,” result in platelets
with only a five-day shelf-life, and are more expensive than other
mitigation services. Id. at 10-11, 14 (noting that ARC’s INTERCEPT-
treated platelets will cost hospitals $150 per dose). PRT “has
been associated with two transfusion-related deaths from sepsis
caused by bacterial contamination” that the treatment did not
eliminate. Id. at 11. According to Verax, ARC’s plan will make it
“impossible” for hospitals to purchase mitigation services from
Verax, as the FDA has not endorsed pairing Rapid Secondary Tests
like PGDprime with PRT technologies like INTERCEPT. Id. at 14.
Verax alleges that ARC’s policy will harm patients by decreasing
platelet quality and increasing safety risks, and harm hospitals
by raising costs and eliminating choice.

V. ARC’s Statements about Verax
Verax claims that over the course of several years, ARC
knowingly made a series of false or misleading statements about
PGDprime to Verax’s customers. For example, in July 2020, ARC sent
hospitals that purchased PGDprime a document titled “The American
Red Cross Approach to Platelet Safety, Implementation Plan for
Bacterial Control Strategies, Frequently Asked Questions” (“FAQ”).
Dkt. 1 at 17. ARC also published the FAQ on its website. In it,
ARC asserted first that “secondary, point-of-issue . . . bacterial
testing (e.g., the Verax PGD test) involves a new testing regimen
for most hospitals, is time consuming to perform and involves

significant cost both in materials and staff time.” Id. Second, it
declared that “[PRT] platelets offer the best and most efficacious
approach to ensuring platelet safety while sustaining the blood
supply.” Id. at 18. Third, it stated that providing platelets
compatible with Verax’s test would “add additional costs and
inventory management complexity[,] potentially compromising the
platelet supply.” Id. Fourth, it explained that ARC decided to
sell only PRT-treated platelets to “protect the safety and
availability of the platelet supply.” Id. Fifth, it expressed that
PRT “contributes to a stronger blood supply by qualifying more
units for transfusion through the elimination of false positives
associated with . . . rapid testing.” Id. at 19. And sixth, it
touted that PRT-treated platelets “offer substantial patient

safety benefits and improved inventory simplification.” Id.
ARC also discussed Verax in its Winter 2020 newsletter, which
ARC published online and distributed to hospitals including
Verax’s customers. The newsletter stated that “[p]erformance of
secondary . . . rapid testing (e.g., Verax testing) adds
additional labor, cost to the transfusion service, and reduces the
final product volume.” Id. at 20. Finally, between 2015 and October
2021, ARC told Verax’s customers that PGDprime could not extend
the shelf-life of untreated platelets sold by ARC from five to
seven days. During the same period, ARC tried to convince Verax’s
customers to switch from buying untreated platelets to buying PRT-

treated platelets by stating that “PRT broadly qualifies for
Medicare/Medicaid reimbursement, implying that PGDprime did not,”
even though “both PRT and PGDprime qualify for reimbursement under
the exact same circumstances.” Id. at 21.
VI. Procedural History
Verax filed this suit against ARC on February 14, 2023. See
Dkt. 1. It raised three counts under the Sherman Act: tying
(Count I), exclusive dealing (Count II), and attempted
monopolization (Count III). It also raised three counts under state
law: unfair methods of competition and unfair and deceptive
practices (Count IV), defamation (Count V), and tortious
interference with contractual relations (Count VI). ARC moved to
dismiss all counts on April 17, 2023. See Dkt. 18. On August 4,

2023, the United States filed a statement of interest under 28
U.S.C. § 517, arguing that contrary to ARC’s assertions, ARC can
be sued under the Sherman Act. See Dkt. 34. The Court held a
hearing on the motion on September 28, 2023. See Dkt. 39.
LEGAL STANDARD
When considering a motion to dismiss under Federal Rule of
Civil Procedure 12(b)(6), the Court accepts the well-pleaded
allegations in the complaint as true and construes reasonable
inferences in the plaintiff’s favor. Breiding v. Eversource
Energy, 939 F.3d 47, 49 (1st Cir. 2019). “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)). “Plausible,
of course, means something more than merely possible, and gauging
a pleaded situation’s plausibility is a context-specific job that
compels [the court] to draw on [its] judicial experience and common
sense.” Schatz v. Republican State Leadership Comm., 669 F.3d 50,
55 (1st Cir. 2012) (cleaned up).
DISCUSSION
I. Antitrust Claims (Counts I-III)
Verax brings three claims under the Sherman Act: tying
(Count I), exclusive dealing (Count II), and attempted

monopolization (Count III). The Sherman Act prohibits
“contract[s], combination[s] . . . or conspirac[ies], in restraint
of trade or commerce,” as well as “attempt[s] to monopolize . . .
any part of” interstate commerce. 15 U.S.C. §§ 1-2. As a
preliminary matter, parties dispute whether ARC is subject to
liability under the Sherman Act at all. To determine whether the
Sherman Act reaches ARC, the Court applies the two-step analysis
articulated in FDIC v. Meyer, 510 U.S. 471, 484 (1994). The Court
must first ask whether there is a waiver of sovereign immunity for
actions against ARC. U.S. Postal Serv. v. Flamingo Indus. (USA)
Ltd., 540 U.S. 736, 743 (2004). The second question is “whether

the substantive prohibitions of the Sherman Act apply” to ARC. Id.
The answer to the first question is yes. Since 1905, ARC’s
statutory charter has stated that ARC may “sue and be sued in
courts of law and equity, State or Federal, within the jurisdiction
of the United States.” 36 U.S.C. § 300105(a)(5); see 36 U.S.C § 2
(1905). This language in the charter constitutes a waiver of ARC’s
sovereign immunity. See Flamingo, 540 U.S. at 743. But “[a]n
absence of immunity does not result in liability if the substantive
law in question is not intended to reach the federal entity.” Id.
at 744. Thus, the next question is whether “the substantive
antitrust liability defined by the statute extends to” ARC. Id.
As to the second question, the Sherman Act “imposes liability
on any ‘person,’” which includes “corporations and associations

existing under or authorized by the laws of . . . the United
States.” Flamingo, 540 U.S. at 744-45 (citing 15 U.S.C. § 7).
“[T]he United States is not an antitrust ‘person,’ in particular
not a person who can be an antitrust defendant.” Id. at 745. “The
remaining question, then, is whether for purposes of the antitrust
laws,” ARC “is a person separate from the United States itself.”
Id. at 746. ARC argues that as a federal instrumentality, it is
not. Both Verax and the United States argue that it is.
The Supreme Court’s decision in United States Postal Service
v. Flamingo Industries (USA) Ltd. gives a birds-eye view of the
legal framework. Id. At issue in Flamingo was whether the United

States Postal Service (“USPS”) is an antitrust “person” separate
from the United States. Id. at 746. Analyzing both the “form and
function” of USPS, the Court held that it is “part of the
Government of the United States and so is not controlled by the
antitrust laws.” Id. at 748.
As to form, the Court focused on USPS’s enabling statute,
which describes it as “an independent establishment of the
executive branch of the Government of the United States.” Id. at
740 (citing 39 U.S.C. § 201). This “statutory designation,” the
Court held, is “not consistent with the idea that [USPS] is an
entity existing outside the Government.” Id. at 746. Had Congress
created USPS as a corporation, the Court suggested it “would have
[had] to ask whether the Sherman Act’s definition” of a “person,”

which includes corporations, covered USPS. Id. But the Court did
not decide whether or under what circumstances a federally
chartered corporation would be an antitrust person separate from
the United States. Id.
As to function, the Court noted that USPS has “different
goals, obligations, and powers from private corporations.” Id. at
747. The Court stated that “[t]he most important difference”
between USPS and private corporations is that USPS “does not seek
profits, but only to break even, . . . which is consistent with
its public character.” Id. USPS also fulfills public obligations
“including the provision of universal mail delivery, the provision

of free mail delivery to certain classes of persons, and . . .
increased public responsibilities related to national security.”
Id. (internal citation omitted). Finally, the Court noted that
USPS exercises “many powers more characteristic of Government than
of private enterprise,” including “the power of eminent domain,
and the power to conclude international postal agreements,” which
also supported treating USPS as a public rather than private entity
under the antitrust laws. Id.
Two years after Flamingo, the Sixth Circuit considered
whether the Tennessee Valley Authority (“TVA”), a corporation
created by federal statute, is subject to liability under the
Sherman Act. See McCarthy v. Middle Tenn. Elec. Membership Corp.,

466 F.3d 399, 412-14 (6th Cir. 2006) (citing 16 U.S.C. § 831).
Noting it was not an “easy question,” the Sixth Circuit held that
TVA is a separate antitrust person from the federal government.
Id. at 414 (quoting Flamingo, 540 U.S. at 746). The court reasoned
that “the key distinction presented by Flamingo, that the TVA is
a federal corporation unlike the Postal Service, supports the
conclusion that the TVA is not immune from antitrust liability”
even though it has “certain public characteristics.” Id.
With Flamingo as a guide, this Court concludes that in both
form and function, ARC is not an antitrust person. The issue is
close.

A. Form
First, ARC’s enabling statute demonstrates a congressional
intent to treat it as an instrumentality of the federal government.
Three years after Flamingo, Congress codified ARC’s status as “a
Federally chartered instrumentality of the United States” and
affirmed that it “has the rights and obligations consistent with
that status.” Modernization Act §§ 2(b)(4)-(5) (codified at 36
U.S.C. § 300101(a)). One of those “rights” of an instrumentality
of the United States is immunity from antitrust suit. See Sea-Land
Serv., Inc. v. Alaska R.R., 659 F.2d 243, 244 (D.C. Cir. 1981)
(Ginsburg, J.) (“Congress did not place the United States or its
instrumentalities under the governance of the Sherman Act.”). This
Court treats Congress’ “choice of words [as] more informed than

unconsidered,” see Flamingo, 540 U.S. at 746, especially given
that Congress has also “create[d] entities and confer[red] upon
them non-governmental status” when it has intended to do so, Baker
v. Runyon, 114 F.3d 668, 671 (7th Cir. 1997); see, e.g., 47 U.S.C.
§ 396(b) (creating the “Corporation for Public Broadcasting” but
stating it “will not be an agency or establishment of the United
States Government”). “The mere fact that Congress even had to
explicitly waive [ARC’s] sovereign immunity . . . in the first
place” supports the argument that Congress views ARC as an arm of
the sovereign. See Robinson v. Runyon, 149 F.3d 507, 516-17 (6th
Cir. 1998); Baker, 114 F.3d at 671. “[O]therwise such a waiver

would be unnecessary.” Robinson, 149 F.3d at 517.
Verax contends that ARC’s status as a federal corporation
alone places it within the Sherman Act’s ambit. The caselaw does
not support that ironclad rule. For example, the Sixth Circuit
held that Federal Reserve Banks, which are federal corporations,
are not separate antitrust persons from the United States
government because of the “role of the Federal Reserve System as
manager of the fiscal affairs of the federal government and the
money supply of the nation.” Jet Courier Servs., Inc. v. Fed. Rsrv.
Bank, 713 F.2d 1221, 1228 (6th Cir. 1983). Corporate form is not
dispositive of antitrust personhood; the corporation’s function
matters too.
In its statement of interest, the United States insists that

ARC is a federal instrumentality only for the limited purpose of
immunity from state taxation. In Department of Employment v. United
States, the Supreme Court held that “federal instrumentalities
like the Red Cross” are “exempt from state taxation.” 385 U.S.
355, 361 (1966). The United States argues that Congress expressly
refers to Department of Employment in the Modernization Act’s
prefatory language:
The United States Supreme Court held The American
National Red Cross to be an instrumentality of the United
States, and it is in the national interest that the
Congressional Charter confirm that status and that any
changes to the Congressional Charter do not affect the
rights and obligations of The American National Red
Cross to carry out its purposes.

Modernization Act § 2(a)(7) (emphasis added). According to the
United States, Congress’s reference to Department of Employment
evinces an intent to codify only ARC’s tax immunity, not full
instrumentality status. But the United States overlooks the rest
of the Modernization Act. In the same section cited by the United
States, Congress states twice without qualification that ARC “is
and will remain a Federally chartered instrumentality of the United
States” with “the rights and obligations consistent with that
status.” Modernization Act §§ 2(b)(4)-(5). As noted above, one
such “right” is immunity from antitrust suit. Sea-Land, 659 F.2d
at 244. If Congress intended to limit ARC’s instrumentality status,
it would have stated so explicitly in ARC’s amended charter.
Compare 12 U.S.C. §§ 1716b, 1723a(c)(2) (creating the Federal

National Mortgage Association as a “[g]overnment-sponsored private
corporation” and exempting it “from all taxation now or hereafter
imposed by any [s]tate”), with 36 U.S.C. § 300101(a) (providing
that ARC is “a Federally chartered instrumentality of the United
States”). Although this issue is less than clear, the language of
ARC’s statutory charter, which does not contain a limitation,
controls.
The United States also maintains that ARC is a separate
antitrust person because “the United States does not own, control,
or supervise the ARC.” Dkt. 34 at 6. However, governmental
ownership and control are not dispositive of personhood under the

Sherman Act. See Flamingo, 540 U.S. at 747. The decisions cited by
the United States are inapposite because they involve different
claims with different legal standards. See, e.g., Dep’t of Transp.
v. Ass’n of Am. R.R., 575 U.S. 43, 53 (2015) (holding that under
the Due Process Clause, Amtrak is not an “autonomous private
enterprise” due to its “unique features and its significant ties
to the Government”); Forsham v. Harris, 445 U.S. 169, 186 (1980)
(holding that a federal grantee was not an agency under the Freedom
of Information Act). Moreover, the sole antitrust case the United
States cites in support treated governmental ownership as
“immaterial” to personhood analysis. See Jet Courier Servs., 713
F.2d at 1228 (focusing on public goals and responsibilities).
B. Function

Second, ARC’s “goals, obligations, and powers” support
treating ARC as a public rather than a private entity. Flamingo,
540 U.S. at 747. In Flamingo, the Court stated that the “most
important difference” between USPS and private enterprises was
that USPS “does not seek profits.” Id. ARC is a nonprofit
corporation. Moreover, ARC’s charter requires it to fulfill a
variety of public functions, see id., including effectuating
treaty obligations and coordinating domestic and international aid
both during peacetime and during war or emergency, 36 U.S.C.
§ 300102. It is true that ARC’s enabling statute does not endow it
with “powers more characteristic of Government than of private

enterprise” such as eminent domain or the ability to conclude
international agreements. Flamingo, 540 U.S. at 747; see 36 U.S.C.
§ 300105 (listing ARC’s powers). Even so, on balance, ARC’s public
attributes outweigh its private ones for this analysis. Cf.
Robinson, 149 F.3d at 516 (“Although the Postal Service has
‘commercial like’ operation, it functions as part of the federal
government.”); Baker, 114 F.3d at 670 (“The Postal Service may be
run in a manner similar to a private commercial entity, but it is
not a private commercial entity.”).
The United States contends that because ARC’s goals require
it to work independently of the government, it is a separate
antitrust person. See Dkt. 34 at 11 (citing 36 U.S.C. § 300102(3)).
In Flamingo, USPS’s statutory status as an “independent

establishment of the executive branch” weighed in favor of treating
it as one with the federal government, not against doing so. See
540 U.S. at 740 (emphasis added). Finally, the United States
asserts that because “[f]ederal courts have repeatedly concluded
that . . . the ARC is a corporate ‘person’ separate from the United
States itself,” the same should follow here. Dkt. 34 at 5. But the
decisions the United States relies on predate the 2007 amendment
to ARC’s statutory charter, and again, they discuss ARC’s
governmental status under distinct legal regimes and standards.
See, e.g., Hall v. Am. Nat’l Red Cross, 86 F.3d 919, 922 (9th Cir.
1996) (Religious Freedom Restoration Act); Marcella v. Brandywine

Hosp., 47 F.3d 618, 624 (3d Cir. 1995) (trial by jury); Irwin Mem’l
Blood Bank of the S.F. Med. Soc’y, 640 F.2d 1051, 1057 (9th Cir.
1981) (Freedom of Information Act); Rayzor v. United States, 937
F. Supp. 115, 119 (D.P.R. 1996) (Federal Tort Claims Act).
Because ARC is an instrumentality of the United States, it is
not a “person” separate from the United States under the Sherman
Act. Verax’s antitrust claims are dismissed.
II. Defamation (Count V)
Verax also sues ARC for defamation. To state a claim for
defamation, Verax must show that ARC “published a false statement
about [it] to a third party that . . . caused [it] economic loss
or was of the type that is actionable without proof of economic
loss.” Phelan v. May Dep’t Stores Co., 819 N.E.2d 550, 553 (Mass.

2004). Verax alleges that ARC defamed it by telling Verax’s
customers “that Verax’s PGDprime test is less safe, more expensive,
and less effective than” Cerus’s INTERCEPT technology, which
caused Verax “substantial economic harm in the form of lost sales
and revenues.” Dkt. 1 at 45-46. ARC argues that at most, it
disparaged PGDprime, not Verax.
“A threshold issue in a defamation action, whether a
communication is reasonably susceptible of a defamatory meaning,
is a question of law for the court.” Phelan, 819 N.E.2d at 554.
The Court applies “an objective test . . . inquir[ing] into a
reasonable recipient’s understanding of the words rather than the

speaker’s intent.” New Eng. Tractor-Trailer Training of Conn.,
Inc. v. Globe Newspaper Co., 480 N.E.2d 1005, 1010 (Mass. 1985).
A disparaging statement about the plaintiff’s product may be
defamatory to the plaintiff when its “imputation fairly implied is
that the plaintiff is dishonest or lacking in integrity, or that
he is deliberately perpetuating a fraud upon the public by selling
a product which he knows to be defective.” See HipSaver, Inc. v.
Kiel, 984 N.E.2d 755, 762 n.6 (Mass. 2013) (quoting W.L. Prosser
& W.P. Keeton, Torts § 128, at 965 (5th ed. 1984)). Here, Verax’s
allegations fall short of that bar.
Verax alleges that ARC told its customers, among other things,
that PGDprime “is time consuming to perform and involves
significant cost both in materials and staff time,” Dkt. 1 at 17,

that using PGDprime would “add additional costs and inventory
management complexity[,] potentially compromising the platelet
supply,” id. at 18; see also id. at 21, that PRT “contributes to
a stronger blood supply by qualifying more units for transfusion
through the elimination of false positives associated with . . .
rapid testing,” id. at 19, and that PGDprime could not extend the
shelf-life of untreated platelets sold by ARC from five to seven
days, id. at 21. Regardless of their truth or falsity, these
statements are criticisms of PGDprime, not of Verax, and could not
reasonably be interpreted as stating or implying that Verax is
“dishonest or lacking in integrity.” HipSaver, 984 N.E.2d at 762

n.6 (“[C]ourts generally are reluctant to impute a lack of
integrity to a corporation merely from a criticism of its product.”
(cleaned up) (quoting Dairy Stores, Inc. v. Sentinel Publ’g Co.,
516 A.2d 220, 224 (N.J. 1986))). Because Verax has not alleged
that ARC’s statements about PGDprime objectively disparaged its
integrity, it fails to state a claim for defamation.
III. Tortious Interference with Contractual Relations (Count VI)
Verax has alleged that ARC tortiously interfered with Verax’s
contracts with hospitals to sell PGDprime. Dkt. 1 at 46. To state
a claim for tortious interference with a contract, Verax must show

that “(1) [it] had a contract with a third party; (2) [ARC]
knowingly induced the third party to break that contract; (3)
[ARC]’s interference, in addition to being intentional, was
improper in motive or means; and (4) [Verax] was harmed by [ARC]’s
actions.” Psy-Ed Corp. v. Klein, 947 N.E.2d 520, 536 (Mass. 2011).
ARC alleges that Verax has not “identif[ied] a specific contract
that [ARC] allegedly interfered with, or a specific Verax customer”
that ARC induced to breach a contract with Verax. Dkt. 19 at 25.
Verax responds that it has “clearly and precisely defined the set
of customers it lost, even if it did not name each one
individually.” Dkt. 23 at 24-25.

Verax has alleged that it had contractual relationships with
hospitals that purchased non-PRT platelets from ARC and employed
PGDprime as their preferred mitigation service. See Dkt. 1 at 13,
36. It has also alleged that ARC communicated with its customers
intending “to convince [them] to switch to [ARC’s] PRT service,”
which would require customers to stop using PGDprime. Id. at 21.
Although Verax does not state specific customers it lost, it
plausibly alleges that it lost a “substantial” share of its
Massachusetts customers. See, e.g., id. at 41. These facts are
sufficient to show that ARC interfered with Verax’s business
relationships. Moreover, Verax has alleged that ARC knew its
communications to Verax’s customers about PGDprime were false or
misleading. Id. at 17-21. Thus, Verax has pleaded improper means.

Finally, Verax also claims it “lost sales and revenues,” which is
sufficient to show damages at this stage. Id. at 46.
IV. Massachusetts Consumer Protection Law (Count IV)
Verax also brings a claim under Mass. Gen. Laws ch. 93A. Verax
alleges that “ARC has engaged . . . in unfair methods of
competition and unfair and deceptive practices” by:
[T]ying its sales of platelets to sales of its platelet
bacteria mitigation services, by attempting to
monopolize the market for platelet bacteria mitigation
services, by coercing its most reliant platelet
customers into exclusive dealing arrangements for its
platelet bacteria mitigation services, by defaming
Verax, by repeatedly issuing false and misleading
statements about its and Verax’s platelet bacteria
mitigation services, and by tort[i]ously interfering
with Verax’s customer relationships.

Dkt. 1 at 44. ARC argues that insofar as Verax’s Chapter 93A claim
is derivative of its antitrust, defamation, and tortious
interference claims, if those claims are dismissed, this one must
be as well. See Skehel v. DePaulis, No. 13-11202, 2017 WL 2380164,
at *2 (D. Mass. June 1, 2017) (“Chapter 93A claims [that] are
derivative of . . . unsuccessful claims . . . cannot succeed.”).
Additionally, ARC contends that Verax has not alleged any
misconduct occurred “primarily and substantially within”
Massachusetts as required under Chapter 93A. Dkt. 19 at 26 (quoting
Mass. Gen. Laws ch. 93A, § 11). Verax responds that its Chapter
93A claim is not wholly derivative of its other claims, and that
the “center of gravity” of its allegations is Massachusetts.

Dkt. 23 at 23 (quoting Bradley v. Dean Witter Realty, Inc., 967 F.
Supp. 19, 29-30 (D. Mass. 1997)).
Even if this Court accepted ARC’s argument about derivative
claims, as noted above, Verax has successfully pleaded tortious
interference, so a Chapter 93A claim based on the same underlying
conduct may proceed. Verax has also alleged that ARC violated
Chapter 93A “by repeatedly issuing false and misleading statements
about its and Verax’s platelet bacteria mitigation services,”
which is not derivative of any other claim. Dkt. 1 at 44. ARC does
not dispute that issuing misleading statements would constitute an
unfair and deceptive trade practice under Chapter 93A but argues

that Verax has not satisfied Chapter 93A’s geographic
requirements.
Chapter 93A only allows for suit when “the alleged unfair
method of competition or the unfair or deceptive act or practice
occurred primarily and substantially within” Massachusetts. Mass.
Gen. Laws ch. 93A, § 11. Massachusetts courts consider three
factors in determining whether challenged acts occurred “primarily
and substantially in Massachusetts”: “(1) where the alleged
conduct took place, (2) where the plaintiff received and acted
upon the statements, and (3) where the plaintiff’s losses were
suffered.” Bradley, 967 F. Supp. at 29 (citing Bushkin Assocs.,
Inc. v. Raytheon Co., 473 N.E.2d 662, 672 (Mass. 1985)).
Verax is based in Massachusetts. It claims that ARC “issu[ed]

false, defamatory, misleading, and deceptive statements in
Massachusetts to Verax’s . . . Massachusetts customers.” Dkt. 1 at
44 (emphasis added). Verax further alleges that ARC sent the
allegedly misleading FAQ and the Winter 2020 newsletter to Verax’s
customers, which include the Massachusetts hospitals to whom Verax
“often” sells PGDprime. Id. at 17, 20. Thus, Verax has sufficiently
pleaded that it received ARC’s statements and suffered losses in
Massachusetts. ARC is not based in Massachusetts and Verax notes
that it does not know whether ARC issued its FAQ, newsletter, and
other communications from Massachusetts, notwithstanding that it
may have directed them to Massachusetts hospitals. See Dkt. 23 at

23-24. Nevertheless, because the other two factors weigh in favor
of Verax, this Court holds that the conduct occurred primarily and
substantially in Massachusetts.
Because at least some of Verax’s Chapter 93A theories are
adequately pled, the Court does not dismiss.
ORDER
For the reasons stated above, ARC’s Motion to Dismiss
(Dkt. 18) is ALLOWED IN PART as to Counts I-III & V, and DENIED IN
PART as to Counts IV and VI.

SO ORDERED.

/s/ PATTI B. SARIS
Patti B. Saris
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10201850. Public record. Not legal advice.