YUEN v. IDEXX LABORATORIES INC

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

CAM YUEN et al., on behalf of )

themselves and all others )

similarly situated, )

)

Plaintiffs, )

)

v. ) 2:22-cv-00392-JDL

)

IDEXX LABORATORIES, INC., et )

al., )

)

Defendants. )

ORDER ON DEFENDANTS’ RENEWED MOTION TO DISMISS

The Plaintiffs in this putative class action allege that Defendants IDEXX

Laboratories, Inc., and IDEXX Distribution, Inc., (collectively, “IDEXX”) have

engaged in anti-competitive behavior that has caused the Plaintiffs to pay artificially

inflated prices for veterinary diagnostic products. IDEXX is a provider of veterinary

diagnostic products, including analyzers, consumable reagents, and single-use rapid

test kits. The Class Action Complaint (“Complaint”), dated July 25, 2022 (ECF No.

1), alleges violations of Sections 1 and 2 of the Sherman Antitrust Act (the “Sherman

Act”), 15 U.S.C.A. §§ 1-2 (West 2023), and a variety of state antitrust and consumer

protection statutes. IDEXX moves to dismiss all federal and state claims (ECF No.

86). Because I conclude that the Plaintiffs lack antitrust standing regarding the

federal antitrust claims, I grant the motion in part and, for reasons I will explain,

deny the motion in part with respect to the state law antitrust and consumer

protection claims.

I. BACKGROUND

The following facts are derived from the Complaint. I treat the non-conclusory

factual allegations in the Complaint as true for the purpose of analyzing the motion

to dismiss. See Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011).

The twenty-two named Plaintiffs are pet owners from a variety of states who

assert that they have borne the costs of IDEXX’s supra-competitive prices, which

were passed on to them by their veterinarians. Plaintiffs bring the Complaint on

their own behalf and on behalf of all similarly situated plaintiffs in thirty-one

jurisdictions.1 IDEXX sells its diagnostic test equipment by forgoing a middleman

and distributors and selling directly to veterinary practices. To accomplish this sales

model, IDEXX enters into contracts with veterinary practices that have minimum

purchasing quotas and require exclusivity with IDEXX. The Complaint asserts that

this model has enabled IDEXX to shut out competition and impose above-market

prices for its diagnostic test equipment—costs that are ultimately passed on to the

pet owners.

IDEXX’s contracts run for six years and contain “steep ‘disloyalty’ penalty

provisions” that are “scaled to the practice’s individual purchase history” to “lock-in”

the veterinary practice. ECF No. 1 at 4, ¶ 7. Veterinary practices face what the

Complaint describes as devastating and unsustainable penalties if they try to

extricate themselves from IDEXX’s contracts. Furthermore, the Plaintiffs allege that

1 Specifically, the Plaintiffs bring the Complaint on behalf of plaintiffs in “repealer jurisdictions”—

jurisdictions that have repealed the Illinois Brick bar on indirect purchaser plaintiff recovery described

below. See Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). The Plaintiffs identify thirty-one U.S.

IDEXX strictly enforces its contracts through aggressive collection actions and

designs its products to ensure that veterinary practices will not use more than one

brand of analyzer or consumable at a time.

The Complaint asserts that, through these practices, IDEXX has foreclosed

competition and wields monopoly power because the cost for a veterinary practice to

switch to a competitor supplier is prohibitively high. Each of IDEXX’s two main

competitors, Heska Corporation and Zoetis, Inc., is alleged to have a lower market

share than IDEXX. The Plaintiffs assert that IDEXX’s outsized market share allows

it to continually raise its prices with minimal loss of customers. The Complaint also

asserts that “IDEXX’s anticompetitive behavior has caused pet owners like Plaintiffs

and other similarly situated indirect purchasers to pay artificially inflated prices for

in-house point-of-care (“POC”) analyzers, consumables, and single-use rapid test kits,

which are components of in-house POC diagnostic tests that veterinary practices use

to treat family pets and other companion animal patients.” As context for their

claims, the Plaintiffs argue that the antitrust market relevant to this action is the

sale of in-clinic diagnostic products, which is composed of two submarkets: the sale of

analyzers and consumables2 and the sale of single-use rapid test kits. According to

the Plaintiffs, IDEXX has a monopoly in both the relevant antitrust market and the

two submarkets, and there are high barriers to entry for potential competitors.

2 According to the Complaint, “analyzers” are devices, instruments, or machines that are used to

perform diagnostic testing at veterinary clinics, and “consumables” are single-use items such as slides

and reagents that are loaded into analyzers for testing.

In terms of federal claims, the Plaintiffs allege in Counts 1 and 2 that, by

entering into anticompetitive agreements with veterinary practices, IDEXX has

injured Plaintiffs in violation of Sections 1 and 2 of the Sherman Act, which proscribe

unreasonable restraints of trade and monopolizing trade, respectively. See 15

U.S.C.A. §§ 1, 2. The Plaintiffs seek injunctive and declaratory relief to prevent

further violations, but they do not seek any damages under federal antitrust law.

With respect to state law claims, the Plaintiffs allege in Counts 3 through 28

that IDEXX’s conduct violates the antitrust laws of several states3 and the District

of Columbia. According to the Plaintiffs, “[a]lthough each individual count relies

upon state law, the essential elements of each state antitrust claim are the same,” so

showing that IDEXX’s conduct violated the “federal Sherman Antitrust Act, will, if

proven, establish a claim under each of the state laws [pleaded].” ECF No. 1 at 46,

¶ 196. The Plaintiffs contend that they are entitled to various forms of relief available

under the state laws, including damages. Finally, the Plaintiffs assert in Counts 29

through 43 that IDEXX’s conduct violates the consumer protection laws of several

states4 and the District of Columbia. Again, the Plaintiffs seek various forms of relief

available under the state laws, including damages.

The Plaintiffs filed their Complaint in the U.S. District Court for the Northern

District of California. IDEXX moved to transfer venue to the District of Maine

asserting that, among other things, many relevant witnesses are in Maine where

3 Arizona, California, Illinois, Iowa, Kansas, Maine, Maryland, Michigan, Minnesota, Mississippi,

Missouri, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, North Dakota,

Oregon, Rhode Island, South Dakota, Tennessee, Utah, West Virginia, and Wisconsin.

4 California, Florida, Massachusetts, Montana, Nebraska, Nevada, New Hampshire, New Mexico,

IDEXX is headquartered (ECF No. 53). Concurrently, IDEXX filed a Motion to

Dismiss similar to the motion currently under advisement (ECF No. 54). The

Plaintiffs opposed the transfer of venue (ECF No. 55), but the Northern California

District Court granted IDEXX’s Motion to Transfer Venue (ECF No. 58). After the

case was transferred to the District of Maine, IDEXX filed its Renewed Motion to

Dismiss (ECF No. 86), asserting that (1) the pet owners are disfavored plaintiffs who

lack antitrust standing under the Sherman Act; (2) the Plaintiffs likewise lack

standing to bring state law antitrust claims; and (3) the Plaintiffs’ state law consumer

protection claims also fail for lack of standing and other reasons.

II. DISCUSSION

A. Motion to Dismiss: Legal Standard

“There is no special pleading requirement for motions to dismiss in the context

of an antitrust action.” Breiding v. Eversource Energy, 344 F. Supp. 3d 433, 438 (D.

Mass. 2018). Instead, the regular Rule 12(b)(6) standard applies. “To avoid

dismissal, a complaint must provide ‘a short and plain statement of the claim showing

that the pleader is entitled to relief.’” García-Catalán v. United States, 734 F.3d 100,

102 (1st Cir. 2013) (quoting Fed. R. Civ. P. 8(a)(2)). “At the pleading stage, the

plaintiff need not demonstrate that she is likely to prevail, but her claim must suggest

‘more than a sheer possibility that a defendant has acted unlawfully.’” Id. at 102-03

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The Court “accept[s] as true all

well-pleaded facts set forth in the complaint and draw[s] all reasonable inferences

therefrom in the pleader’s favor.” Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir.

2011) (quoting Artuso v. Vertex Pharm., Inc., 637 F.3d 1, 5 (1st Cir. 2011)). But “[i]f

the factual allegations in the complaint are too meager, vague, or conclusory to

remove the possibility of relief from the realm of mere conjecture, the complaint is

open to dismissal.” Id. (quoting SEC v. Tambone, 597 F.3d 436, 442 (1st Cir. 2010)

(en banc)).

B. Federal Antitrust Standing

IDEXX’s overarching argument for dismissing the federal antitrust claims is

that the Plaintiffs are consumers of veterinary services, not of IDEXX’s veterinary

products, and therefore lack antitrust standing to challenge the prices charged for

those products. The Clayton Act creates private causes of action for violations of

federal antitrust law, see 15 U.S.C.A. §§ 15, 26 (West 2023), but plaintiffs must satisfy

the threshold requirements of the “‘antitrust standing’ doctrine” to bring such a claim.

Vázquez-Ramos v. Triple-S Salud, Inc., 55 F.4th 286, 293 (1st Cir. 2022).

The purpose of antitrust standing is “‘to avoid overdeterrence’ and to ‘ensure

that suits inapposite to the goals of the antitrust laws are not litigated and that

persons operating in the market do not restrict procompetitive behavior because of a

fear of antitrust liability.’” Id. (quoting Serpa Corp. v. McWane, Inc., 199 F.3d 6, 10

(1st Cir. 1999)). Antitrust standing is distinct from Article III standing in that the

former is a prudential requirement5 whereas the latter is a constitutional

5 In Serpa Corp., the First Circuit explained:

Standing is restricted in antitrust cases to avoid overdeterrence. By limiting the

availability of private antitrust actions to certain parties, federal courts “ensure that

suits inapposite to the goals of the antitrust laws are not litigated and that persons

operating in the market do not restrict procompetitive behavior because of a fear of

antitrust liability.” . . . The result is that standing in an antitrust case is “not simply a

search for an injury in fact; it involves an analysis of prudential considerations aimed

at preserving the effective enforcement of the antitrust laws.”

199 F.3d at 10 (citation omitted) (quoting Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1448-49

requirement. See id. at 292-93 (distinguishing between antitrust and Article III

standing); RSA Media, Inc. v. AK Media Grp., Inc., 260 F.3d 10, 13 (1st Cir. 2001)

(quoting Serpa Corp., 199 F.3d at 10). The doctrine “seek[s] to ensure that the

prospective antitrust plaintiff has suffered an injury of the kind antitrust laws were

intended to prevent, such that the plaintiff is a proper party to bring a federal

antitrust suit.” Vázquez-Ramos, 55 F.4th at 293.

The requirements for federal antitrust standing are somewhat “less stringent”

where a plaintiff seeks only equitable relief, In re New Motor Vehicles Canadian Exp.

Antitrust Litig., 522 F.3d 6, 13 (1st Cir. 2008), and the antitrust standing analysis

may involve different considerations where a plaintiff seeks an injunction rather than

damages, see Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 111 n.6 (1986)

(observing that standing determinations under Sections 4 and 16 of the Clayton Act

will “not always be identical” because of the distinct remedies available under each

section). However, plaintiffs seeking injunctive relief must still satisfy the federal

antitrust standing doctrine. See Vázquez-Ramos, 55 F.4th at 293 & n.3 (citing

Sections 4 and 16 of the Clayton Act as creating private causes of action for violations

of federal antitrust law and noting that plaintiffs proceeding under either must

satisfy the requirements of both Article III and antitrust standing.).

The Supreme Court has established a six-factor test for antitrust standing that

courts must consider:

(1) the causal connection between the alleged antitrust violation and

harm to the plaintiff; (2) an improper motive; (3) the nature of the

plaintiff’s alleged injury and whether the injury was of a type that

Congress sought to redress with the antitrust laws (“antitrust injury”);

(4) the directness with which the alleged market restraint caused the

asserted injury; (5) the speculative nature of the damages; and (6) the

risk of duplicative recovery or complex apportionment of damages.

Serpa Corp., 199 F.3d at 10. These are often referred to as the Associated General

factors, or AGC factors, in recognition of the Supreme Court decision that announced

them: Associated General Contractors of California, Inc. v. California State Council

of Carpenters, 459 U.S. 519 (1983). Although courts “technically balance” the AGC

factors to determine if there is standing, the First Circuit has “emphasized the

causation requirements” embodied in the first, third, and fourth factors. RSA Media,

Inc., 260 F.3d at 14. As explained in RSA Media, Inc.:

Both the first and fourth factors expressly require causation between

the alleged violation and the alleged harm. And although the third

factor does not explicitly raise the issue of causation, the Court has

defined “antitrust injury” as injury of the type the antitrust laws were

intended to prevent and that flows from that which makes the

defendants’ acts unlawful. In other words, the third factor of the

standing test requires a proper plaintiff to prove more than injury

causally linked to an illegal presence in the market. The plaintiff must

prove that the injury is the type of loss that the claimed violations . . .

would be likely to cause. Even when a causal link has been established

between the alleged violation and the injury, the absence of “antitrust

injury” will generally defeat standing.

260 F.3d at 14 (emphasis in original) (internal quotation marks and citations

omitted).

1. Applying the Associated General Test

a. The First, Third, and Fourth Associated General Factors: Antitrust

Injury and Causation Requirements

IDEXX’s arguments that the Plaintiffs lack antitrust standing focus primarily

on whether the Plaintiffs are proper parties to bring this antitrust case and whether

the allegations in the Complaint satisfy the collective causation requirements of the

first, third, and fourth Associated General factors.

In considering the parties’ contentions, I take the well-pleaded factual

allegations in the Complaint as true, draw all reasonable inferences in the Plaintiffs’

favor, and then determine if the Plaintiffs have plausibly narrated a claim for relief.

Zenon v. Guzman, 924 F.3d 611, 615-16 (1st Cir. 2019). “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.’” Id. at 616 (quoting Schatz v. Republican State Leadership

Comm., 669 F.3d 50, 55 (1st Cir. 2012)).

i. Whether the Plaintiff Pet Owners Have Plausibly Alleged

That They Are Consumers in the Market for Analyzers,

Consumables, and Single-Use Rapid Tests

IDEXX contends that the Plaintiff pet owners do not participate in the “market

where trade is allegedly restrained”—the market for POC diagnostic products—but

instead participate in the market for veterinary healthcare services that IDEXX’s

direct customers provide. Serpa Corp., 199 F.3d at 10. Plaintiffs acknowledge that

they are “indirect purchasers,”6 ECF No. 87 at 22, in the market for POC diagnostic

products but argue that they have standing because they pay the veterinarians not

for their services but for the diagnostic products themselves.

6 The fact that the Plaintiffs do not purchase items directly from IDEXX is not dispositive. To be

sure, the rule in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), prevents indirect purchasers from

suing an alleged antitrust violator for damages under federal antitrust law. However, that bar does

not apply in actions involving declaratory and injunctive relief—only in damages cases. See Apple Inc.

v. Pepper, 139 S. Ct. 1514, 1520 n.1 (2019) (“Illinois Brick held that the direct-purchaser requirement

applies to claims for damages. . . . [and] did not address injunctive relief . . . .”); Dickson v. Microsoft

Corp., 309 F.3d 193, 213 n.24 (4th Cir. 2002) (“Illinois Brick’s indirect purchaser rule, when applicable,

bars only compensatory damages relief and does not apply to injunctive relief.”); Phillip E. Areeda &

Herbert Hovenkamp, Antitrust Law § 346d (LEXIS 2023) (“Illinois Brick has not therefore barred an

Some parts of the Complaint allege that the Plaintiffs actually purchase POC

diagnostic products from veterinarians. The Complaint alleges generally that each

named Plaintiff “has purchased IDEXX POC Diagnostic Products, including

analyzers, consumables, and single-use rapid test kits, from veterinary practices.”

ECF No. 1 at 9, ¶¶ 24-45. It also asserts that, “[d]uring the Class Period . . . ,

veterinary practices . . . sold POC Diagnostic Products to Class members in the same

form in which they purchased them from IDEXX, meaning IDEXX POC Diagnostic

Products followed a traceable physical chain from Defendants to Plaintiffs and Class

members, and the overcharges on them can be traced from Defendants to Plaintiffs

and Class members.” ECF No. 1 at 39, ¶ 148.

However, the Plaintiffs do not allege specific facts supporting their assertion

that they “purchase” POC diagnostic products. Additional allegations in the

Complaint make such an assertion seem implausible: most notably, the Complaint

alleges that analyzers are in-office instruments that cost between $12,000 and

$30,000, and that veterinary practices purchase them up-front as part of six-year

contracts with IDEXX. Nowhere in the 552 numbered paragraphs of the Complaint

do the Plaintiffs affirmatively identify a situation where one or more of the Plaintiffs

were charged and paid for—in whole or in part—a $12,000 to $30,000 IDEXX

analyzer, a consumable, or a single-use rapid test kit.7

To meet the test of plausibility, the Complaint must contain facts suggesting

that it is more than merely possible that one or more Plaintiffs purchased an IDEXX

7 Similarly, Plaintiffs’ response to the Motion to Dismiss (ECF No. 87) does not refer to a single

instance in which a Plaintiff purchased and was charged by a veterinarian for an IDEXX analyzer,

analyzer, consumable, or single-use rapid test kit from a veterinarian. The Plaintiffs’

failure to plead any facts making that direct assertion or supporting a reasonable

inference of the same suggests instead that such a transaction never occurred and

that the Plaintiffs were either direct or indirect “purchasers” of analyzers,

consumables, and single-use rapid test kits only in the sense that they purchased

professional services from veterinarians who used those products. Applying “judicial

experience and common sense,” Zenon, 924 F.3d at 616, and viewing the alleged facts

in the light most favorable to the Plaintiffs, the Complaint does not plausibly allege

facts showing that the Plaintiffs are purchasers in the allegedly threatened market

that is the subject of their Complaint.

The First Circuit cases that the Plaintiffs cite do not support a different result.

Plaintiffs contend that it is presumed in the First Circuit that “consumers, like

Plaintiffs, have antitrust standing when they pay overcharges.” ECF No. 87 at 21.

In support of this proposition, the Plaintiffs cite SAS of Puerto Rico, Inc. v. Puerto

Rico Telephone Co., 48 F.3d 39, 45 (1st Cir. 1995); Serpa Corp. v. McWane, Inc., 199

F.3d 6, 10 (1st Cir. 1999); and Arroyo-Melecio v. Puerto Rican American Insurance

Co., 398 F.3d 56, 72-73 (1st Cir. 2005). I address each of these three decisions in turn.

In SAS of Puerto Rico, the First Circuit noted that presumptively “proper”

plaintiffs in antitrust suits are customers or potential competitors in the allegedly

threatened market. 48 F.3d at 44. The court determined that the plaintiff there, a

supplier of pay phones, was not actually a participant in either of the two markets

allegedly dominated by the defendant: the provision of pay phone service in Puerto

Rico and the provision of long-distance service from such pay phones. Id. The First

Circuit concluded that the supplier was not an appropriate antitrust plaintiff and

affirmed the district court’s dismissal of the case. Id. at 45-46.

The presumption favoring antitrust standing for competitors and consumers

was also recognized in Serpa Corp.: “Competitors and consumers in the market where

trade is allegedly restrained are presumptively the proper plaintiffs to allege

antitrust injury.” 199 F.3d at 10. The plaintiff there, a distributor of plumbing

supplies, brought an antitrust suit when it lost its position as the exclusive sales

representative for the defendant, a manufacturer of plumbing supplies. 199 F.3d at

9-10. The court concluded that the plaintiff had not shown antitrust injury, reasoning

that the distributor was not a presumptively favored plaintiff, like a competitor or

customer, and that its injuries did not arise from the defendant’s allegedly

anticompetitive conduct. Id. at 12.

Finally, in Arroyo-Melecio, plaintiff car owners asserted antitrust claims

against automobile insurance companies and an agency from whom they purchased

insurance. 398 F.3d at 63. The plaintiffs were inarguably purchasers in the market

that they alleged the defendants had unlawfully restrained: the car insurance

market. The First Circuit held that, as consumers, the Arroyo-Melecio plaintiffs were

“presumptively favored as appropriate plaintiffs to assert antitrust injury,” id. at 72,

and, on that basis, reversed the trial court’s dismissal of their federal antitrust

claims, id. at 74.

The three decisions—SAS of Puerto Rico, Serpa Corp., and Arroyo-Melecio—do

not support a finding of antitrust standing in this instance. Here, the Complaint does

not plausibly allege that the Plaintiffs are consumers of POC diagnostic products in

a manner comparable to the Arroyo-Melecio plaintiffs who purchased automobile

insurance. Like the plaintiffs in SAS of Puerto Rico and Serpa Corp., the Plaintiffs

here have allegedly experienced financial injury, but they are neither consumers or

competitors in the allegedly restrained market who are presumptively favored

plaintiffs for purposes of antitrust standing.

The Plaintiffs also cite In re Automotive Parts Antitrust Litigation, 50 F. Supp.

3d 869 (E.D. Mich. 2014), to support their argument. In that case, a class of

automobile dealers and end-payor plaintiffs brought a lawsuit against suppliers of

occupant safety restraint systems in automobiles “for engaging in a massive

conspiracy to unlawfully fix and artificially raise . . . prices.” Id. at 878. The plaintiffs

in that case alleged that the markets for cars and for occupant safety restraint

systems are “inextricably linked and intertwined.” Id. at 887. The court found that

the plaintiffs had standing under the Associated General factors, reasoning in part

that “[t]he precise amount of the overcharge impacting the prices of new motor

vehicles containing [occupant safety restraint systems] can be measured and

quantified” and, therefore, “there is a reasonable inference . . . that Defendants’

anticompetitive conduct harmed businesses and impacted the prices that consumers

paid for new vehicles.” Id.

The First Circuit Court of Appeals has not adopted the view, reflected in In re

Automotive Parts Antitrust Litigation, that plaintiffs need not be market participants

to have antitrust standing if their injuries occurred in a market that is “inextricably

intertwined” with the market in which the claimed antitrust violation is alleged to

have occurred. In SAS of Puerto Rico, the First Circuit expressed doubt that the

phrase “inextricably intertwined”—which the Supreme Court employed in Blue

Shield of Virginia v. McCready, 457 U.S. 465, 484 (1982)—“was ever intended as a

legal test of standing.” 48 F.3d at 46. The First Circuit explained:

Quite apart from difficulties in application, such a test would certainly

be very hard to square with the longstanding limitations on claims by

stockholders, employees and even indirect purchasers. Nothing in

McCready suggests that it intended to overrule those limitations even

though it would be very easy to describe such injuries as inextricably

intertwined in the ordinary suggestive sense of the phrase.

Id. In Serpa Corp., the First Circuit again rejected the “inextricably intertwined”

language from McCready as establishing a standard for antitrust standing,

explaining “that such an approach would needlessly expand the limits of antitrust

standing currently in place in this Circuit.”8 199 F.3d at 13. Thus, McCready’s

“inextricably intertwined” language does not support antitrust standing for the

Plaintiffs in the present case.

8 In declining to apply the “inextricably intertwined” standard in Serpa Corp., the First Circuit

stated:

Serpa urges the Court to apply the “inextricably intertwined” language of McCready to

this case. We decline. First, this Court has already stated that “[i]t is doubtful that

this language—if taken as a physical image—was ever intended as a legal test of

standing.” SAS, 48 F.3d at 46. Second, while standing in McCready was conferred to

a plaintiff who was only derivatively injured, the plaintiff was a consumer in the

market directly affected by the antitrust violation. Accordingly, subsequent Supreme

Court jurisprudence has interpreted the McCready language as a legal conclusion; i.e.,

applying the “inextricably intertwined” standard to consumers and

competitors. Moreover, even if we thought “inextricably intertwined” was a proper test

for standing, the facts do not support its application in this case.

Specifically, Serpa’s marginal pricing discretion belies plaintiff's assertion that

defendants necessarily had to terminate Serpa to eliminate competition in the New

England plumbing supply market. Therefore, under the circumstances of this case, we

decline to interpret McCready broadly, believing that such an approach would

needlessly expand the limits of antitrust standing currently in place in this Circuit.

ii. Whether the Plaintiff Pet Owners May Proceed as

Derivatively Injured Antitrust Plaintiffs

IDEXX argues further that, as indirect purchasers, Plaintiffs are disfavored

antitrust plaintiffs who must show “good cause” to establish antitrust standing. ECF

No. 86 at 16-17 (quoting SAS of Puerto Rico, 48 F.3d at 45). IDEXX contends that

“good cause” is only shown if there is no other party more directly affected by the

challenged conduct with the incentive and ability to bring the challenge. IDEXX

argues that good cause is not shown by the Complaint’s allegations regarding the

terms of its contracts with veterinary practices.

Plaintiffs argue that “IDEXX has robbed [veterinarians] of any practical

ability” to bring suit, ECF No. 87 at 10, by imposing contractual terms that “adopt a

loser-pays scheme, which undoes the legislative policy of allowing antitrust plaintiffs

to recover attorney’s fees if they prevail without owing them if they lose,” ECF No. 87

at 13. In support, the Plaintiffs contend that the contracts’ terms “prevent

veterinarians from recovering treble damages or trying their cases to a jury.” ECF

No. 87 at 13. Further, the Plaintiffs assert that “the contracts also require

veterinarians to bring any lawsuit only on an individual basis, and not to seek to have

it heard as a class action, a representative action, a collective action, a private

attorney-general action, or in any proceeding that joins, consolidates, or combines

legal proceedings.” ECF No. 87 at 13.

In some circumstances, a disfavored plaintiff may be found to have antitrust

standing if good cause is shown—particularly if there is no “first best” plaintiff that

has an incentive or ability to sue. Serpa Corp., 199 F.3d at 12; SAS of Puerto Rico,

48 F.3d at 45. In Serpa Corp., the First Circuit found that there was no good cause

to extend antitrust standing to a distributor plaintiff because, contrary to the

plaintiff’s contention, it was not the only viable plaintiff—both the defendant

manufacturer’s competitors and consumers had the incentive and ability to assert

antitrust claims. 199 F.3d at 12-13. And in SAS of Puerto Rico, the First Circuit

concluded that there was no good cause to confer antitrust standing on the plaintiff,

a supplier, because “those threatened by the [alleged] market injury . . . include

various potential plaintiffs . . . who should have ample incentive and ability to

challenge violations.” 48 F.3d at 45. Thus, the plaintiff had not shown good cause as

a “second-best plaintiff” to assert antitrust standing. 48 F.3d at 45.

Applying the preceding principles here, I first consider the clause in IDEXX’s

contracts with veterinarians that bars class action lawsuits and, by extension, other

forms of representative, collective, private attorney-general, and similar proceedings

cited by Plaintiffs. The Supreme Court has explained in connection with class action

waivers:

The antitrust laws do not evince an intention to preclude a waiver of

class-action procedure. The Sherman and Clayton Acts make no

mention of class actions. In fact, they were enacted decades before the

advent of Federal Rule of Civil Procedure 23, which was designed to

allow an exception to the usual rule that litigation is conducted by and

on behalf of the individual named parties only.

Am. Express Co. v. Italian Colors Rest., 570 U.S. 228, 234 (2013) (internal quotation

marks and citations omitted). In Italian Colors, the Supreme Court upheld the

enforcement of a contract’s individual arbitration requirement, stating that the

parties had “agreed to arbitrate pursuant to that usual rule, and it would be

remarkable for a court to erase that expectation.” Id. (quotation marks omitted); see

(E.D.N.Y. 2020), aff’d, 19 F.4th 127 (2d Cir. 2021). The reasoning employed in Italian

Colors suggests that the class action clause here does not deprive contracting

veterinarians of the ability to enforce federal antitrust laws. Plaintiffs have not cited

to any authority to the contrary.

The Plaintiffs also fail to cite to any case authority in connection with the

alleged additional barriers to suit contained in IDEXX’s contracts—including the

“loser-pays” requirement with respect to attorney’s fees, and the restrictions on treble

damages and jury trials. These impediments, whether considered individually or

collectively, do not demonstrate that the veterinarians who contract with IDEXX lack

the “incentive or ability to sue” as first-best plaintiffs. SAS of Puerto Rico, 48 F.3d at

45. Accordingly, Plaintiffs have not shown that the impediments to suit contained in

IDEXX’s contracts with veterinary practices are so onerous as to rob those practices

of their ability to bring suit.

Plaintiffs have also not put forth persuasive arguments showing that IDEXX’s

two main competitors, Zoetis, Inc., and Heska Corporation, are impaired or prevented

from asserting antitrust claims against IDEXX. The Complaint alleges:

60. There are two other entities that offer POC diagnostic

analyzers, consumables, and single-use rapid test kits to veterinary

practices in the United States: Zoetis, Inc. (“Zoetis”) and Heska

Corporation (“Heska”). As is the case with IDEXX, Zoetis analyzers use

only Zoetis consumables, and the same is true of the analyzers sold by

Heska.

* * *

71. Neither Zoetis nor Heska has had more than a 10% to 15%

share of the POC Diagnostic Products market at any time relevant to

the claims alleged in this Complaint.

* * *

76. As with the POC Diagnostic Products market, IDEXX has at

all relevant times maintained at least 70% share of the Analyzer &

Consumables submarket through its exclusionary conduct that has

resulted in a nearly 100% retention rate. Neither Zoetis nor Heska has

had more than a 10% to 15% share of the Analyzer & Consumables

submarket at any time relevant to this Complaint.

ECF No. 1 at 18-21, ¶¶ 60, 71, 76. The Complaint also asserts that Zoetis, “a former

Pfizer, Inc. subsidiary . . . spent approximately $2 billion acquiring Abaxis in 2018 to

bolster its efforts in the Relevant Market and Submarkets.” ECF No. 1 at 34-35,

¶ 128. Even when read in the light most favorable to the Plaintiffs, the Complaint’s

allegations (1) suggest that IDEXX’s two main competitors are sufficiently capitalized

to have the means to advance antitrust claims against IDEXX and (2) offer no basis

to conclude that those competitors lack the ability to bring such claims. Thus, it

appears that “at least some consumers, as well as defendants’ competitors, have

ample incentive to bring an antitrust claim.” Serpa Corp., 199 F.3d at 12.

iii. Whether the Alleged Antitrust Violation Caused the

Plaintiffs’ Injuries, and the Directness of that Connection

The first and fourth Associated General factors address the “causal connection”

between the alleged antitrust violation and the alleged injury, and the “directness” of

that causal connection. IDEXX argues that “many factors independent from the

alleged difficulty veterinarians face in switching to IDEXX’s competitors readily

explain the pet owners’ claimed injury of paying too much to veterinarians during

office visits.” ECF No. 86 at 19. IDEXX notes that it is the veterinarians who set the

prices for their services, and that a variety of factors influence those prices including

“the size of a practice, the median income of customers, the labor costs for technicians,

the level of competition locally, corporate consolidation in the veterinary practice

industry, the extent to which pet insurance is present, or simply the veterinarian’s

individual judgment about what price is appropriate.” Id. The Plaintiffs respond

that their injuries are “as [d]irect as [i]ndirect [p]urchaser [i]njuries [c]an [b]e.” ECF

No. 87 at 21.

The extent to which the alleged antitrust violations have caused the Plaintiffs’

alleged injuries is uncertain from the Complaint. That uncertainty is consistent with

the procedural posture of this case; assessing the “directness” of an alleged causal

connection often requires factual development that is unavailable at the motion to

dismiss stage. See Arroyo-Melecio, 398 F.3d at 73. Rather, “[d]ismissal at the

pleadings stage is more often associated with disfavored plaintiffs” who are not

consumers. Id. As discussed above, the Plaintiffs here have not plausibly pleaded

that they qualify as purchasers in the market where they allege the market restraint

has occurred.

b. The Second Associated General Factor: Improper Motive

The “improper motive” factor in the Associated General test can be summarily

resolved. It weighs in favor of standing here because the Complaint undoubtedly

alleges improper motive—a fact that IDEXX appears to concede. However, this factor

alone, which is present in almost every antitrust case, is insufficient to sway the

Associated General test in Plaintiffs’ favor if the other factors weigh against standing.

See Associated General, 459 U.S. at 537 (“We are also satisfied that an allegation of

improper motive, although it may support a plaintiff’s . . . claim . . . , is not a panacea

that will enable any complaint to withstand a motion to dismiss.” (footnote omitted));

Sullivan v. Tagliabue, 25 F.3d 43, 47 n.7 (1st Cir. 1994) (“[T]he presence of an

improper motive on the part of the defendants is not, by itself, determinative of

antitrust standing.”); Breiding, 344 F. Supp. 3d at 456 (concluding that the improper

motive factor was insufficient to overcome the other Associated General factors).

c. The Fifth and Sixth Associated General Factors: Speculative

Damages and Risk of Duplicative Recovery

The two remaining Associated General factors are the speculative nature of the

damages (fifth factor) and the risk of duplicative recovery or complex apportionment

of damages (sixth factor). Neither factor bears on the analysis of standing with

respect to equitable relief under the federal antitrust laws. As the Supreme Court

explained in Cargill:

Standing analysis under § 16 will not always be identical to standing

analysis under § 4. For example, the difference in the remedy each

section provides means that certain considerations relevant to a

determination of standing under § 4 are not relevant under § 16. The

treble-damages remedy, if afforded to every person tangentially affected

by an antitrust violation, or for all injuries that might conceivably be

traced to an antitrust violation, would open the door to duplicative

recoveries and to multiple lawsuits. In order to protect against multiple

lawsuits and duplicative recoveries, courts should examine other factors

in addition to antitrust injury, such as the potential for duplicative

recovery, the complexity of apportioning damages, and the existence of

other parties that have been more directly harmed, to determine

whether a party is a proper plaintiff under § 4. Conversely, under § 16,

the only remedy available is equitable in nature, and . . . the fact is that

one injunction is as effective as 100, and, concomitantly, that 100

injunctions are no more effective than one. Thus, because standing

under § 16 raises no threat of multiple lawsuits or duplicative

recoveries, some of the factors other than antitrust injury that are

appropriate to a determination of standing under § 4 are not relevant

under § 16.

479 U.S. at 111 n.6 (internal quotation marks and citations omitted); see also Int’l

Ass’n of Machinists & Aerospace Workers, AFL-CIO, Loc. Lodge No. 1821 v. Verso

Paper Corp., 80 F. Supp. 3d 247, 270 (D. Me. 2015) (discussing this aspect of Cargill).

Thus, as IDEXX expressly acknowledges, the fifth and sixth Associated General

factors “do not apply to Plaintiffs’ Sherman Act claims.” ECF No. 86 at 21. But see

In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig., 383 F. Supp. 3d 187,

221 (S.D.N.Y. 2019) (noting that the “principles” underlying those factors inform the

Second Circuit’s “efficient enforcer” analysis, even in the context of actions seeking

injunctive relief). These factors are, however, relevant to the state law claims

discussed below.

2. Conclusion with Respect to Federal Antitrust Standing

Considered holistically, the Associated General factors do not support federal

antitrust standing for the Plaintiffs here. Accordingly, IDEXX is entitled to the

dismissal of the federal antitrust claims asserted in the Complaint.

C. State and Consumer Protection Law Claims

The Plaintiffs also seek damages and relief under the antitrust and consumer

protection laws of several states. These states, called “repealer jurisdictions” have

passed statutes that expressly reject the bar on indirect purchaser recovery

announced by the Supreme Court in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).

See supra note 1. Under Illinois Brick, and reaffirmed in Apple Inc. v. Pepper, 139

S. Ct. 1514, 1521 (2019), indirect purchasers who are two or more steps removed from

the alleged antitrust violator in a distribution chain may not sue the violator for

damages under federal law. See Kansas v. UtiliCorp. United, Inc., 497 U.S. 199, 207

(1990) (defining an indirect purchaser as one who is not “the immediate buyer[] from

the alleged antitrust violator[]”); see also William Holmes & Melissa Mangiaracina,

Antitrust Law Handbook § 9:9 (West 2023). But Illinois Brick’s bright-line rule does

not preclude states from enacting “repealer statutes” that permit indirect purchasers

to sue for damages under that state’s antitrust law. See California v. ARC Am. Corp.,

490 U.S. 93, 101-02 (1989) (concluding that state antitrust laws permitting indirect

purchaser recovery were not preempted by federal antitrust laws); Holmes &

Mangiaracina, supra, § 9:9.

IDEXX argues that the Plaintiffs lack antitrust standing on their state law

claims under the Associated General test for the same reasons that they lack antitrust

standing under the federal antitrust laws. IDEXX argues, specifically, that “[d]istrict

courts throughout the country have held that the same AGC test that applies to

federal claims also applies to state law antitrust claims.” ECF No. 86 at 22. IDEXX

also points to “harmonization provisions” that it contends are strong evidence that

these states would adopt the Associated General test.9 ECF No. 86 at 22; see also

ECF No. 86 at 30 (compiling statutory “harmonization provisions” and court

interpretations of the same). Based on the Associated General factors, IDEXX

contends that the Plaintiffs do not have standing to bring their state law claims—

particularly given the fifth and sixth factors of the Associated General test, which

apply in cases involving damages. IDEXX asserts that the Plaintiffs’ state claims

under both antitrust and consumer protection laws should be dismissed.

The Plaintiffs “do not contest that state antitrust laws are uniform as applied

to Plaintiffs’ claims, and that this uniformity extends to state consumer-protection

9 The only state law antitrust claim that IDEXX acknowledges is not subject to Associated General

is Minnesota’s antitrust law. This conclusion is certainly the case; it was the precise holding of the

Minnesota Supreme Court in Lorix v. Crompton Corp., 736 N.W.2d 619, 627-28 (Minn. 2007). IDEXX

argues that even under the Minnesota Supreme Court’s admittedly broad standard for antitrust

standing, the Plaintiffs lack antitrust standing under Lorix.

laws.” ECF No. 87 at 26. Instead, they argue that they have antitrust standing under

the state laws, that indirect purchaser standing here is consistent with the repealer

jurisdictions’ enactment of laws overruling Illinois Brick, and that IDEXX has applied

the antitrust standing doctrine incorrectly to the facts of this case.

The parties have not identified any First Circuit authority that addresses

whether the Associated General factors apply uniformly when determining standing

under state antitrust laws. Several out-of-circuit cases, however, have refrained from

making sweeping conclusions about the applicability of the Associated General factors

to state law claims. See, e.g., In re Lithium Ion Batteries Antitrust Litig., No.

13-MD-2420 YGR, 2014 WL 4955377, at *11 (N.D. Cal. Oct. 2, 2014) (concluding that,

with respect to the majority of states at issue, “the authority is too uncertain to

conclude that they would apply AGC without any modification”); In re Aftermarket

Filters Antitrust Litig., No. 08 C 4883, 2009 WL 3754041, at *7 (N.D. Ill. Nov. 5, 2009)

(“Most district courts that have reached the issue have concluded that whether the

AGC standards can be applied must be determined on a state by state basis.”); see

also In re Flash Memory Antitrust Litig., 643 F. Supp. 2d 1133, 1151-52 (N.D. Cal.

2009) (rejecting the defendants’ arguments that Associated General applied

across-the-board to all the state antitrust laws at issue and instead concluding that

it applied only in Iowa, Nebraska, and California).

The parties’ briefing on whether the Associated General factors control the

standing issue for purposes of the state antitrust and consumer protection claims is

sparse. Further, the parties have not had the opportunity to consider and address

how my conclusions regarding federal antitrust standing affect the state antitrust

and consumer protection claims. Accordingly, I deny IDEXX’s motion to dismiss in

part as to the state antitrust and consumer protection claims asserted in the

Complaint. This denial is, however, without prejudice to IDEXX filing a renewed

motion to dismiss as to the state law antitrust and consumer protection claims within

thirty (30) days, supported by a memorandum of law.

III. CONCLUSION

It is accordingly ORDERED that:

• IDEXX’s Renewed Motion to Dismiss (ECF No. 86) is GRANTED IN PART

with respect to the federal antitrust claims set forth in the Complaint (Counts

1 and 2).

• IDEXX’s Renewed Motion to Dismiss (ECF No. 86) is DENIED IN PART

without prejudice with respect to the state law antitrust and consumer

protection claims set forth in the Complaint (Counts 3-43). IDEXX may file a

renewed motion to dismiss within thirty (30) days, supported by a

memorandum of law.

SO ORDERED.

Dated: January 8, 2024

/s/ JON D. LEVY

CHIEF U.S. DISTRICT JUDGE