PharmacyChecker.com LLC v. LegitScript LLC

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

PHARMACYCHECKER.COM LLC, Case No. 3:22-cv-252-SI

Plaintiff, OPINION AND ORDER

v.

LEGITSCRIPT LLC,

Defendant.

Philip S. Van Der Weele, K&L GATES LLP, One SW Columbia Street, Suite 1900, Portland,

OR 97204; Aaron R. Gott, BONA LAW PC, 331 Second Avenue South, Suite 420, Minneapolis,

MN 55401; and James F. Lerner, BONA LAW PC, 41 Madison Avenue, Suite 2509, New York,

NY 10010. Of Attorneys for Plaintiff PharmacyChecker.com LLC.

Richard P. Sybert, Hannah Brown, and Matthew Mejia, GORDON REES SCULLY MANSUKHANI

LLP, 1300 SW Fifth Avenue, Suite 2000, Portland, OR 97201; John T. Mills, GORDON REES

SCULLY MANSUKHANI LLP, One Battery Park Plaza, 28th Floor, New York, NY 10004;

and Christopher Pallanch, TONKON TORP LLP, 888 SW Fifth Avenue, Suite 1600, Portland,

OR 97204. Of Attorneys for Defendant LegitScript LLC.

Michael H. Simon, District Judge.

Plaintiff PharmacyChecker.com LLC (PharmacyChecker) brings this antitrust lawsuit

under § 1 of the Sherman Act, 15 U.S.C. § 1, alleging that it is the victim of a conspiracy to

restrain competition in the markets for online pharmacy verification services and comparative

drug pricing information. As alleged by PharmacyChecker, the United States is in a prescription

drug crisis. The cost of prescription medicine in the United States is higher than anywhere in the

world, and the effect on public health is disastrous. Millions of Americans each year do not fill

needed prescriptions because of cost. As a result, many become sicker or even die. Others—

about four million people annually—seek their medications from pharmacies abroad at lower

cost. Yet prescription drug importation into the United States is generally forbidden by federal

law.

PharmacyChecker launched PharmacyChecker.com in 2003. PharmacyChecker compares

the prices of online pharmacies based inside and outside the United States. According to

PharmacyChecker, it operates a rigorous accreditation program that informs visitors of online

pharmacy websites whether those pharmacies have met certain safety standards and obtained

certain credentials. It also provides drug price comparison information that allows visitors

worldwide to find the lowest prices for their prescription medications, whether dispensed in the

United States or abroad. In addition, it offers a prescription drug discount card that allows

consumers to save as much as 90% at many U.S. pharmacies. PharmacyChecker also raises

awareness about policy issues relating to prescription medication access and affordability in the

United States. PharmacyChecker is not a pharmacy and does not itself buy, sell, import,

dispense, process orders for, or distribute any drugs.

In August 2019, PharmacyChecker filed a federal lawsuit in the Southern District of New

York (the New York Case). In that action, PharmacyChecker alleged violations of federal

antitrust law, among other claims, and sued five alleged conspirators: (1) the National

Association of Boards of Pharmacy (NABP); (2) the Alliance for Safe Online Pharmacies;

(3) the Center for Safe Internet Pharmacies Ltd.; (4) the Partnership for Safe Medicines, Inc.; and

(5) the defendant here, LegitScript LLC (LegitScript).1 The first four defendants (collectively,

the New York Defendants) are business associations or organizations of pharmacy industry

players. LegitScript is a for-profit, privately managed verification and monitoring service for

online pharmacies. It is the only private service of that kind recognized by Defendant NABP.

PharmacyChecker alleges that LegitScript directly competes with PharmacyChecker in the

market for online pharmacy verification services.

Now before the Court is a motion for summary judgment filed by LegitScript. Because of

issues relating to personal jurisdiction, LegitScript is the only defendant in this action in the

District of Oregon. The other alleged conspirators, the New York Defendants, have since

prevailed in the New York Case on their own motion for partial summary judgment against

PharmacyChecker’s antitrust claim. In the pending motion in this case, LegitScript argues that

issue preclusion bars PharmacyChecker from continuing its antitrust claim in this Court.

Alternatively, LegitScript moves for summary judgment on the same grounds that the New York

Defendants argued in the New York Case, asserting that PharmacyChecker has not suffered any

cognizable antitrust injury and therefore lacks standing. LegitScript contends that the main

purpose of PharmacyChecker’s business is to enable U.S. consumers illegally to import for

personal use prescription drugs from foreign pharmacies.

PharmacyChecker responds that issue preclusion is not applicable because the partial

summary judgment opinion in the New York Case is not a sufficiently final judgment to warrant

preclusive effect. PharmacyChecker also argues that LegitScript fails to meet its burden of

1 The Court’s Opinion and Order denying LegitScript’s motion to dismiss expands on the

allegations against the defendants in the New York Case, their roles in the alleged conspiracy to

restrain competition, and the relevant markets alleged by PharmacyChecker.

PharmacyChecker.com LLC v. LegitScript LLC, 614 F. Supp. 3d 796, 803-08 (D. Or. 2022).

showing that issue preclusion applies because the issues in the two cases are not identical

because a different legal standard applies under Ninth Circuit law than was applied in the New

York Case. PharmacyChecker further argues that its business is entirely legal and that under

Supreme Court and Ninth Circuit precedent, none of PharmacyChecker’s activities preclude

antitrust standing. For the reasons explained below, the Court denies LegitScript’s motion for

summary judgment.

STANDARDS

A. Summary Judgment

A party is entitled to summary judgment if the “movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a). The moving party has the burden of establishing the absence of a genuine

dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). A court must view

the evidence in the light most favorable to the non-movant and draw all reasonable inferences in

the non-movant’s favor. Clicks Billiards, Inc. v. Sixshooters, Inc., 251 F.3d 1252, 1257 (9th

Cir. 2001). Although “[c]redibility determinations, the weighing of the evidence, and the

drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . ruling

on a motion for summary judgment,” the “mere existence of a scintilla of evidence in support of

the plaintiff’s position [is] insufficient.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 255

(1986). “Where the record taken as a whole could not lead a rational trier of fact to find for the

non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 587 (1986) (quotation marks omitted).

B. Antitrust Standing and Antitrust Injury

A private plaintiff may sue to enforce the Sherman Act under § 4 of the Clayton Act, 15

U.S.C. § 15(a). That statute provides that “any person who shall be injured in his business or

property by reason of anything forbidden in the antitrust laws may sue therefor . . . , and shall

recover threefold the damages by him sustained, and the cost of suit, including a reasonable

attorney’s fee.” 15 U.S.C. § 15(a). A private plaintiff, however, must have “antitrust standing.”

Knevelbaard Dairies v. Kraft Foods, Inc., 232 F.3d 979, 987 (9th Cir. 2000). When deciding

whether a plaintiff has antitrust standing, courts consider “(1) the nature of the plaintiff’s alleged

injury; that is, whether it was the type the antitrust laws were intended to forestall; (2) the

directness of the injury; (3) the speculative measure of the harm; (4) the risk of duplicative

recovery; and (5) the complexity in apportioning damages.” Id. (quoting Am. Ad Mgmt., Inc. v.

Gen. Tel. Co. of Cal., 190 F.3d 1051, 1054-55 (9th Cir. 1999)).

The first factor for antitrust standing—the “nature of the plaintiff’s alleged injury”—

requires a showing of what the law calls “antitrust injury,” that is, “injury of the type the antitrust

laws were intended to prevent and that flows from that which makes defendants’ acts unlawful.”

Id. (quoting Atl. Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 334 (1990)). A showing of

antitrust injury is necessary, but not always sufficient, to establish standing under the antitrust

laws. Cargill, Inc. v. Monfort of Colo., Inc., 479 U.S. 104, 110 n.5 (1986); City of Oakland v.

Oakland Raiders, 20 F.4th 441, 456 (9th Cir. 2021) (describing antitrust injury as “mandatory”

for antitrust standing); see also William H. Page, The Scope of Liability for Antitrust

Violations, 37 Stan. L. Rev. 1445, 1483-85 (1985) (distinguishing concepts of antitrust injury

and antitrust standing).

Parsing the Supreme Court’s definition from Atlantic Richfield Co., the Ninth Circuit has

identified “four requirements for antitrust injury: (1) unlawful conduct, (2) causing an injury to

the plaintiff, (3) that flows from that which makes the conduct unlawful, and (4) that is of the

type the antitrust laws were intended to prevent.” Am. Ad Mgmt, 190 F.3d at 1055.

BACKGROUND2

A. PharmacyChecker’s Products and Revenues

PharmacyChecker provides information services to its website visitors without charge.

Some of these visitors never click through to any pharmacy’s website. These visitors simply use

the information on PharmacyChecker’s website as a comparative-price reference, for research,

for use in policy advocacy, or as an educational tool. A Wall Street Journal op-ed recognized

PharmacyChecker as one of just a handful of companies that provide patients and policymakers

with a resource that gives transparency to prescription drug prices.3 In addition,

2 As noted, LegitScript’s motion is based on two alternative arguments. One relies on

issue preclusion, and the other is based on facts relating to PharmacyChecker’s alleged antitrust

injury. The parties did not provide evidence to this Court on the second issue, only briefing.

LegitScript stated in its motion that it incorporated by reference the briefing and exhibits filed in

the New York Case. At oral argument, LegitScript explained that it did not obtain discovery

from PharmacyChecker because many exhibits in the New York Case were subject to a

protective order. But this Court was unable to access the documents filed under seal in New

York. Further, asking this Court to locate in the docket of the New York Case evidentiary

support, whether under seal or not, for LegitScript’s motion here is not an appropriate method of

presenting evidence. LegitScript acknowledged that it “may have erred . . . simply to refer to the

record in New York.” The Court allowed the parties to submit supplemental briefing and

evidence after oral argument. PharmacyChecker submitted several documents that had been filed

in the New York Case: the declaration of its President and Co-founder Gabriel Levitt

(ECF 282-1), and PharmacyChecker’s statement of material facts submitted in the New York

Case, which included the statement of material facts submitted by the New York Defendants

(ECF 282-2). In response, and to “complete the record,” LegitScript filed the reply to

PharmacyChecker’s statement of material facts filed by the New York Defendants (ECF 291).

No party objected to these submissions, and the Court accepts them. The Court also construes

LegitScript as having adopted the factual positions asserted by the New York Defendants.

Further, the Court considers evidence submitted elsewhere in this Court’s record, including the

affidavits of PharmacyChecker’s Chief Executive Officer and Co-founder, Tod Cooperman, MD

(ECF 19, 56).

3 Joe Grogan & Casey B. Mulligan, In Defense of Pharmacy Benefit Managers, Wall St.

J. (July 11, 2022), https://www.wsj.com/articles/in-defense-of-pharmacy-benefit-managers-

drugs-rebates-patient-costs-premiums-transparency-innovation-regulation-ftc-11657571932

(“Companies such as GoodRx, Pharmacy Checker, and SaveonMeds add transparency to the

system and give patients the option to access affordable medication outside their pharmacy

benefits.”).

PharmacyChecker’s online pharmacy verification and drug price comparison services are

referenced in media sources, including AARP Magazine, the Wall Street Journal, NBC News,

Yahoo Finance, the New York Times, Kaiser Health News, and others. Its drug price

comparisons have been cited by the FDA and academic researchers. Organizations such as

Medicines Sans Frontiers (Doctors Without Borders) have sought advice from PharmacyChecker

on international pharmacy safety and drug pricing, and the World Health Organization has

published reports citing PharmacyChecker. Its executives have testified before Congress

regarding counterfeiting and other issues relating to prescription drugs. Further, a U.S. Senate

staff report expressly relied on data from PharmacyChecker.4

Rather than charge visitors a fee for its information services, PharmacyChecker supports

its website and programs with revenue obtained from several sources. For purposes of the

pending motion, the parties agree that the bulk of PharmacyChecker’s revenue from

January 2015 to August 2021 derived from click-through fees (85%) and verification program

fees (14%) (including fees for accreditation and listing) paid by online pharmacies. Its remaining

revenue, about 1%, came from other sources, such as its prescription drug discount card,

Medicare drug plans, advertising, and the sale of e-books.

Click-through fees are a common form of payment for traffic on the internet. Online

pharmacies pay a fee for each click to their website routed through PharmacyChecker.com,

regardless of the clicker’s geographic origin or location. The parties agree that

approximately 95% of PharmacyChecker’s click-through revenue from January 2015 to

August 2021 was paid by foreign pharmacies. The parties also agree that U.S.-based clicks

4 U.S. Senate Homeland Sec. & Gov’t Affs. Comm., Ranking Member’s Office,

Manufactured Crisis 4 (2018) (“Using PharmacyChecker.com, staff also reviewed price

comparisons for specific brand-name drugs available through verified online pharmacies.”).

generated only 69.4% of click-through revenue during that time. PharmacyChecker also provides

other evidence that millions of users outside of the United States view and use its website.

PharmacyChecker agrees that between 94 to 96% of its total revenue came from foreign

pharmacies. As noted above, however, not all PharmacyChecker’s total revenue, which would

include total revenue from foreign pharmacies, was from click-through revenue, let alone U.S.-

based (or U.S. origin) click-through revenue. Mr. Levitt explains in his declaration that even

applying the figures assumed by the New York Defendants’ expert, at most only 56.7% of

PharmacyChecker’s total revenue came from clicks by U.S. users (or visitors) to foreign

pharmacies. Mr. Levitt multiplied PharmacyChecker’s total click-through revenue by the

percentage of U.S. based consumers (69.4%), then multiplied that number by the percentage of

click-through revenue from foreign pharmacies (rounding up from approximately 95% to 96%),

then divided that number by PharmacyChecker’s total revenue, to arrive at 56.7%.

LegitScript, however, focused on the fact that 96% of click-through revenue came from

foreign pharmacies and 85% of total revenue came from all click-through revenue, in asserting

the percentage of total revenue based on click-throughs to foreign pharmacies. This would

equal 81.6% of total revenue. This calculation, however, does not distinguish U.S.-based clicks

(agreed by the parties to be 69.4%). Reducing the total revenue attributable to foreign pharmacy

click-through income to only U.S. based click-throughs (81.6% times 69.4% equals 56.63%), the

parties would have almost identical percentages for PharmacyChecker’s total revenue received

from foreign pharmacies based on U.S. clicks (56.63% versus 56.7%).

As noted, about 14% of PharmacyChecker’s revenue came from verification program

fees paid by participating online pharmacies, including initial application and annual fees for

verification, and monthly listing fees for being published in PharmacyChecker’s online directory.

Only verified pharmacies may participate in PharmacyChecker’s drug-listing comparison

program. Mr. Levitt also calculates that 13.7% of PharmacyChecker’s verification program

revenue came from U.S.-based pharmacies. Although the parties dispute precise percentages,

they agree that about 5% of PharmacyChecker’s total revenue from January 2015 to August 2021

was from verification fees paid by U.S. online pharmacies and click-through fees paid by U.S.

online pharmacies.

PharmacyChecker does not track visitor activity after visitors to its website click through

to a pharmacy website and thus has no data connecting clicks to purchase transactions. It also

does not receive that information from pharmacies that participate in its programs.

PharmacyChecker earns revenue when visitors click through to pharmacies, but none of that

revenue depends on whether a purchase transaction occurs (except for revenue associated with

the U.S. prescription drug discount card). Mr. Levitt explains that according to one foreign

pharmacy’s estimate, only 3.47% of clicks received through PharmacyChecker.com led to a

purchase transaction. In addition, LegitScript has provided evidence showing that in at least three

instances PharmacyChecker assisted or offered to assist U.S. consumers who purchased

prescriptions from foreign pharmacies for personal use deal with issues related to their orders.

B. Purported Anticompetitive Conduct and Injury

PharmacyChecker alleges that the purported conspirators have engaged in targeted and

coordinated misinformation and “scare” campaigns, group boycotts, and other exclusionary

conduct, all with an objective of destroying PharmacyChecker’s reputation, suppressing its

presence in consumer-accessible channels of the internet, and interfering with its business

relationships. PharmacyChecker also alleges that the actions of the alleged conspirators fall into

five general categories: (1) “blacklisting” PharmacyChecker and having its website designated as

“unsafe”; (2) manipulating search engine results; (3) gatekeeping over the “.pharmacy” domain

extension and trying to have the International Corporation for Assigned Named and Numbers

require the removal of any pharmacy domain not approved by NAPB; (4) persuading pharmacies

not to work with PharmacyChecker; and (5) spreading misinformation adverse to

PharmacyChecker.5

As for injury, PharmacyChecker provides evidence that directly after the alleged

anticompetitive conduct by LegitScript and the New York Defendants, PharmacyChecker’s site

traffic from organic search results dropped more than 78%. PharmacyChecker also provides

evidence that its monthly click-through revenue dropped by more than 77% since March 2019.

PharmacyChecker also offers evidence of reputational harms. Mr. Cooper and Mr. Levitt explain

that fewer U.S. pharmacies have participated in PharmacyChecker’s programs in recent years,

allegedly because of the concerted efforts by LegitScript and the New York Defendants.

PharmacyChecker contends that the alleged conspirators coerced or dissuaded U.S. pharmacies

from participating in PharmacyChecker’s verification and listing programs.

PharmacyChecker gives as an example HealthWarehouse.com, one of the largest U.S.

online pharmacies, which left PharmacyChecker’s verification program in 2017. Mr. Levitt

describes an email he received from HealthWarehouse.com in January 2017, stating that it would

have to leave the PharmacyChecker Verification Program or risk losing its Verified Internet

Pharmacy Practice Sites (VIPPS) accreditation, which is run by New York Defendant NABP.

Similarly, Mr. Cooper explains that LegitScript and the New York Defendants coordinated

U.S.-targeted advertisements using “pharmacychecker” as a Google AdWord to dissuade both

5 In its pending motion, LegitScript does not argue that there is insufficient evidence of

these allegations to raise a genuine issue for trial on the merits of PharmacyChecker’s antitrust

claim, and the Court makes no finding either way. This discussion is provided solely for

background purposes.

online pharmacies and consumers from associating with it or using its services. Mr. Levitt

describes that from 2015 to the present, contemporaneous with the alleged conspiracy, the

number of U.S. pharmacies participating in PharmacyChecker’s verification program dropped

from 36 to 8.

C. The New York Case

In March 2020, LegitScript moved to dismiss in the New York Case, arguing that the

federal court in New York lacked personal jurisdiction over LegitScript, an Oregon company.

U.S. District Judge Kenneth M. Karas found that the federal court in New York lacked personal

jurisdiction over LegitScript and dismissed PharmacyChecker’s claims against LegitScript

without prejudice. PharmacyChecker.com, LLC v. Nat’l Ass’n of Bds. of Pharmacy

(PharmacyChecker I), 530 F. Supp. 3d 301, 320-27 (S.D.N.Y. 2021). Rather than filing an

amended complaint in New York, PharmacyChecker moved to sever its claim against

LegitScript. In February 2022, Judge Karas transferred PharmacyChecker’s lawsuit against

LegitScript to the District of Oregon. Shortly thereafter, LegitScript moved to dismiss under

Rule 12(b)(6), which the Court denied in July 2022. PharmacyChecker.com LLC v. LegitScript

LLC (PharmacyChecker II), 614 F. Supp. 3d 796 (D. Or. 2022). The Court also denied

LegitScript’s motion to stay discovery. PharmacyChecker.com LLC v. LegitScript LLC, 2022

WL 17496113 (D. Or. Dec. 8, 2022).

Meanwhile, in June 2022, the New York Defendants moved for partial summary

judgment against PharmacyChecker’s antitrust claim against them, arguing that

PharmacyChecker lacked antitrust standing. The New York Defendants argued that

PharmacyChecker could not show antitrust standing because the main purpose of its business is

to facilitate illegal conduct by others, specifically, assisting consumers in the United States in

purchasing and importing prescription drugs for their personal use from certified pharmacies

located in other countries. In March 2023, Judge Karas granted that motion.

PharmacyChecker.com v. Nat’l Ass’n of Bds. of Pharmacy (PharmacyChecker III), 2023

WL 2973038 (S.D.N.Y. Mar. 28, 2023). Judge Karas ruled that PharmacyChecker lacks antitrust

standing because its business is “completely or almost completely geared toward facilitating”

consumers’ alleged illegal importation of non-controlled drugs for personal use with a

prescription. Id. at *30.

DISCUSSION

A. Issue Preclusion

LegitScript first argues that the Court should grant summary judgment based on issue

preclusion6 because Judge Karas already decided antitrust standing in favor of the New York

Defendants. PharmacyChecker responds that this argument should fail because there is no final

judgment in the New York Case or, in the alternative, because the issues are not the same.

1. Standards for Issue Preclusion

“The preclusive effect of a judgment is defined by claim preclusion and issue preclusion,

which are collectively referred to as ‘res judicata.’” Taylor v. Sturgell, 553 U.S. 880, 892 (2008).

Claim preclusion occurs when “a final judgment forecloses successive litigation of the very same

claim, whether or not relitigation of the claim raises the same issues as the earlier suit.” Id.

(quotation marks omitted). “Issue preclusion, in contrast, bars successive litigation of an issue of

fact or law actually litigated and resolved in a valid court determination essential to the prior

judgment, even if the issue recurs in the context of a different claim.” Id. (quotation marks

omitted). “By precluding parties from contesting matters that they have had a full and fair

6 Courts previously referred to the form of issue preclusion being sought by LegitScript

as “offensive nonmutual collateral estoppel.”

opportunity to litigate, these two doctrines protect against the expense and vexation attending

multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by

minimizing the possibility of inconsistent decisions.” Id. (cleaned up).

To establish issue preclusion, formerly known as collateral estoppel, “the party asserting

issue preclusion” must show that: “(1) the issue at stake was identical in both proceedings;

(2) the issue was actually litigated and decided in the prior proceedings; (3) there was a full and

fair opportunity to litigate the issue; and (4) the issue was necessary to decide the merits.”

Howard v. City of Coos Bay, 871 F.3d 1032, 1040, 1041 (9th Cir. 2017) (quotation marks

omitted); see also Love v. Villacana, 73 F.4th 751, 754 (9th Cir. 2023) (same). “A final judgment

is afforded preclusive effect even if erroneous.” Love, 73 F.4th at 754.

Courts typically evaluate the first prong—whether the issue is identical—using four

factors:

(1) is there a substantial overlap between the evidence or argument

to be advanced in the second proceeding and that advanced in the

first?

(2) does the new evidence or argument involve the application of

the same rule of law as that involved in the prior proceeding?

(3) could pretrial preparation and discovery related to the matter

presented in the first action reasonably be expected to have

embraced the matter sought to be presented in the second?

(4) how closely related are the claims involved in the two

proceedings?

Howard, 871 F.3d at 1041 (quoting Resolution Tr. Corp. v. Keating, 186 F.3d 1110, 1116 (9th

Cir. 1999)). These factors, however, “are not applied mechanistically.” Id.

2. Analysis

a. Finality of New York Case Decision

PharmacyChecker argues that the partial summary judgment decision by Judge Karas is

not a final judgment for purposes of issue preclusion. In Arizona v. California, the Supreme

Court stated the “general rule” that “issue preclusion attaches only ‘[w]hen an issue of fact or

law is actually litigated and determined by a valid and final judgment, and the determination is

essential to the judgment.’” 530 U.S. 392, 414 (alteration in original) (quoting Restatement

(Second) of Judgments § 27 (1982)), supplemented, 531 U.S. 1 (2000). In discussing the

preclusive effect of a prior court decision for issue preclusion, courts generally reference a

“judgment.” See Taylor, 553 U.S. at 892 (stating that issue preclusion “bars successive litigation

of an issue of fact or law actually litigated and resolved in a valid court determination essential to

the prior judgment” (quotation marks omitted)); Howard, 871 F.3d at 1040-41 (quoting Taylor).7

“To be ‘final’ for collateral estoppel purposes, a decision need not possess ‘finality’ in

the sense of 28 U.S.C. § 1291. A final judgment for purposes of collateral estoppel can be any

prior adjudication of an issue in another action that is determined to be sufficiently firm to be

accorded conclusive effect.” Luben Indus., Inc. v. United States, 707 F.2d 1037, 1040 (9th

Cir. 1983) (quotation marks omitted). To determine whether a decision is “sufficiently firm,” the

Ninth Circuit adopted the factors from the Restatement (Second) of Judgments:

[P]reclusion should be refused if the decision was avowedly

tentative. On the other hand, that the parties were fully heard, that

the court supported its decision with a reasoned opinion, that the

decision was subject to appeal or was in fact reviewed on appeal,

7 The Ninth Circuit has repeatedly stated the Taylor standard for issue preclusion. See,

e.g., Mull v. Motion Picture Indus. Health Plan, 41 F.4th 1120, 1140 (9th Cir. 2022); Media Rts.

Techs., Inc. v. Microsoft Corp., 922 F.3d 1014, 1020 (9th Cir. 2019); Int’l Bhd. of Teamsters v.

U.S. Dep’t of Transp., 861 F.3d 944, 955 (9th Cir. 2017).

are factors supporting the conclusion that the decision is final for

purpose of preclusion.

Id. (emphasis and alteration added in Luben). The Ninth Circuit has subsequently stated in

discussing the requirements for issue preclusion that the decision must be appealed or

appealable. See Env’t Prot. Info. Ctr., Inc. v. Pac. Lumber Co., 257 F.3d 1071, 1076 (9th

Cir. 2001) (“As collateral estoppel does not apply to an unappealable determination, simply

holding a ruling unappealable eliminates any prospect of preclusion.”); Dixon v. Wallowa

County, 336 F.3d 1013, 1020 (9th Cir. 2003) (“Issue preclusion does not apply to an issue that is

not appealable.”).

“[P]artial summary judgment is merely a pretrial adjudication that certain issues shall be

deemed established for the trial of the case.” Fed. R. Civ. P. 56(d) advisory committee’s note

to 1946 amendment, quoted with approval in Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1202 n.9

(9th Cir. 2009). The 2010 amendment to Rule 56, among other things, specifically referenced

“partial summary judgment” in Rule 56(a) and moved the court’s authority to issue an order

adjudicating undisputed facts and granting less than full relief on a motion to Rule 56(g) but

reaffirmed that partial summary judgment is “disposition of less than the whole action, whether

or not the order grants all the relief requested by the motion.” Fed. R. Civ. P. 56(a) advisory

committee’s note to 2010 amendment. A decision granting partial summary judgment generally

is not appealable. See Solis v. Jasmine Hall Care Homes, Inc., 610 F.3d 541, 545-46 (9th

Cir. 2010).

Applying Alaska law, the Ninth Circuit considered whether a decision granting partial

summary judgment could be given preclusive effect. St. Paul Fire & Marine Ins. Co. v. F.H., 55

F.3d 1420 (9th Cir. 1995). The Ninth Circuit concluded that the partial summary judgment

decision was not “sufficiently firm” because the decision “could not have been appealed . . .

when it was entered,” “was subject to reconsideration on proper motion” under Rule 54(b) of the

Alaska Rules of Civil Procedure, and “[t]he court could, on its own initiative, revise the order at

any time before judgment.” Id. at 1425 (quotation marks omitted). This reasoning is equally

applicable under federal law. Decisions adjudicating motions for partial summary judgment

generally can be modified under Rule 54(b) of the Federal Rules of Civil Procedure by a court

either on its own initiative or on a motion by the parties. See, e.g., Credit Suisse First Bos. Corp.

v. Grunwald, 400 F.3d 1119, 1124 (9th Cir. 2005) (“Federal Rule of Civil Procedure 54(b) states

that a district court can modify an interlocutory order ‘at any time’ before entry of a final

judgment, and we have long recognized the well-established rule that a district judge always has

power to modify or to overturn an interlocutory order or decision while it remains interlocutory.”

(quotation marks omitted)); Blackburn v. Sturgeon Servs. Int’l, Inc., 2014 WL 1275919, at *1

(E.D. Cal. Mar. 27, 2014) (“On its own motion, the Court here revises its prior order granting

partial summary judgment.”); In re Galena Biopharma, Inc. Derivative Litig., 2014 WL 5494890

(D. Or. Oct. 30, 2014) (discussing the factors district courts in the Ninth Circuit consider in

evaluating a motion for reconsideration filed under Rule 54(b)). Further, such decisions generally

are not appealable until a final judgment has been entered, absent the grant of mandamus.

Solis, 610 F.3d at 545-46.

Similarly, the Ninth Circuit in Luben affirmed the district court’s conclusion that a

non-tentative, reasoned interlocutory opinion was not entitled to collateral estoppel effect

because it was not sufficiently firm. Luben, 707 F.2d at 1040. The Ninth Circuit agreed with the

district court’s explanation that the interlocutory opinion was “subject to free revision by the

court on its own motion or on motion of any party at any time before judgment” and added that

the opinion “could not have been the subject of an appeal at the time the instant case was decided

in the District Court.” Id. The Ninth Circuit also refused to apply issue preclusion for a reason

not reached by the district court. The Ninth Circuit was “convinced that the Government did not

have a ‘full and fair opportunity to litigate’ its claim because it could not appeal the interlocutory

memorandum” at issue. Id. This again emphasizes the importance of the appealability

requirement.

Judge Karas’s decision does not appear to be tentative, the parties were fully heard, and

Judge Karas issued a reasoned opinion. Nonetheless, like the opinions found lacking in St. Paul

and Luben, the partial summary judgment opinion issued by Judge Karas could not be appealed

at this time because Judge Karas declined to enter a Rule 54(b) partial judgment. Thus, his ruling

is subject to his revision at any time before final judgment is entered in the New York Case. See

Fed. R. Civ. P. 54(b). Thus, it is not entitled to preclusive effect.8 See St. Paul, 55 F.3d at 1425;

Luben, 707 F.2d at 1040; see also Kottom v. Walker, 2015 WL 7301849, at *4 (N.D. Cal. Nov.

19, 2015) (declining to apply issue preclusion to an opinion granting partial summary judgment);

Householder Grp., LLLP v. Van Mason, 2010 WL 5093117, at *3 (D. Ariz. Dec. 8, 2010)

8 LegitScript argues that a final judgment is not required and that St. Paul is

distinguishable because it applied Alaska law. The three bases relied on by the Ninth Circuit in

St. Paul for concluding that a partial summary judgment opinion is insufficiently firm for

preclusive effect, however, are identical under federal law and Alaska law. Additionally, most of

the cases cited by LegitScript involved a decision that was appealed or could have been appealed

but was not. They are thus inapposite to this case, which involves an opinion that is generally not

appealable and for which a Rule 54(b) partial judgment was requested but denied. LegitScript

cites Security People, Inc. v. Medeco Security Locks, Inc., 59 F. Supp. 2d 1040 (N.D. Cal. 1999),

in which the district court stated that a disposition by summary judgment is a decision on the

merits and given preclusive effect. Id. at 1045. That is not necessarily incorrect as a general

proposition. A summary judgment decision resolving all issues in a case is appealable and not

subject to the deficiencies critical to the analysis in Luben and St. Paul. It is unclear whether the

summary judgment decision at issue in Security People was complete or partial. Regardless,

Security People did not address the appealability issue emphasized in Luben and other Ninth

Circuit cases. It was affirmed without any discussion by the Federal Circuit. The Court does not

find Security People persuasive in the current context on the question now pending.

(declining to apply issue preclusion to partial summary judgment order, relying on St. Paul and

stating that “[t]he Ninth Circuit’s language [in St. Paul] concerning the non-preclusive effect of a

partial summary judgment order is both forceful and general in nature, and strongly suggests that

the opportunity to appeal and the finality of an order are important, if not the most important,

considerations for a district court”); id. at *2 (“[T]he St. Paul decision, while stopping short of

articulating a black and white rule, strongly suggests that partial summary judgment orders by

their very nature are not sufficiently firm to have a preclusive effect on any future

proceedings.”); DRK Photo v. McGraw-Hill Cos., 2014 WL 2584811, at *5 (D. Ariz. June 10,

2014) (“The holding in St. Paul calls into question the preclusive effect of the partial summary

judgment order in Wiley. Accordingly, the Court finds that collateral estoppel does not apply to

the standing issue.”), aff’d sub nom. DRK Photo v. McGraw-Hill Glob. Educ. Holdings, LLC,

870 F.3d 978 (9th Cir. 2017); 10B Charles A. Wright & Arthur R. Miller, Federal Practice and

Procedure § 2737 (4th ed. 2023) (explaining that an adjudication of less than the entire action

under Rule 56(g) of the Federal Rules of Civil Procedure is not appealable and “has no

preclusive impact, since the trial court retains jurisdiction to modify the order at any time prior to

the entry of a final judgment” (footnote omitted)); cf. McMillan v. Lowe’s Home Ctrs.,

LLC, 2016 WL 232319, at *4 (E.D. Cal. Jan. 20, 2016) (relying primarily on St. Paul in

declining to apply issue preclusion because the order “denying Lowe’s’ motion to dismiss is not

currently appealable and is subject to free revision by the court on its own motion or on motion

of any party at any time before judgment” and thus concluding that “the Illinois district court’s

order is not ‘sufficiently firm’ to constitute a final judgment for purposes of issue preclusion”).

Further, even if the partial summary judgment opinion in the New York Case might

qualify as “sufficiently firm” to warrant consideration for issue preclusion, LegitScript’s

argument would still fail. As discussed next, LegitScript fails its burden to show the elements

required for issue preclusion.

b. Elements for Issue Preclusion

As noted, even if Judge Karas’s partial summary judgment ruling is “sufficiently firm” to

satisfy that requirement for preclusive effect, LegitScript still must meet its burden to show the

other elements of issue preclusion. Howard, 871 F.3d at 1040. LegitScript fails to show both a

full and fair opportunity to litigate the issues and identicality.

i. Full and Fair Opportunity to Litigate

PharmacyChecker has not been able to appeal Judge Karas’s interlocutory opinion. In

such circumstances, the Ninth Circuit has concluded that a party does not have a full and fair

opportunity to litigate an issue, precluding application of issue preclusion. See, e.g., Luben, 707

F.2d at 1040 (“Moreover, we are convinced that the Government did not have a ‘full and fair

opportunity to litigate’ its claim because it could not appeal the interlocutory memorandum in

Bristol. Thus, we conclude that the District Court did not abuse its discretion in rejecting the

application of the doctrine of collateral estoppel against the Government on the issue.”). Thus,

LegitScript fails to show the applicability of issue preclusion.

ii. Identicality

LegitScript also must show that the issues are identical between the proceedings for issue

prelusion to apply. Howard, 871 F.3d at 1041. Howard provides four factors for courts to

consider when evaluating whether an issue is identical in both proceedings. Id. As noted, “these

factors are not applied mechanistically.” Id. The Court may prioritize some factors over others or

omit some altogether. See, e.g., Syverson v. Int’l Bus. Machs. Corp., 472 F.3d 1072, 1080-81

(9th Cir. 2007) (mentioning only three of the four factors); Cent. Delta Water Agency v. United

States, 306 F.3d 938, 953 (9th Cir. 2002) (evaluating only factual overlap without discussing the

remaining factors).

The second of these “identicality” factors is whether “the new evidence or argument

involve the application of the same rule of law as that involved in the prior proceeding.”

Howard, 871 F.3d at 1041. Moreover, issue preclusion is unavailable when a different legal

standard applies, even to the same facts. Peterson v. Clark Leasing Corp., 451 F.2d 1291, 1292

(9th Cir. 1971) (per curiam) (“Issues are not identical if the second action involves the

application of a different legal standard, even though the factual setting of both suits is the

same.”); Sw. Pet Prods. v. Koch Indus., 32 F. App’x 213, 215 (9th Cir. 2002) (issues not

identical where “different rule of law applies”). Thus, the Court should not grant preclusive

effect to an issue decided under a legal standard inapplicable in this Circuit.

The Court agrees with LegitScript that the top-level issue is the same: whether

PharmacyChecker lacks antitrust standing. The questions that Judge Karas decided, however, are

whether PharmacyChecker’s business is “completely or almost completely geared towards

facilitating illegality” and, if so, whether that is a barrier to antitrust standing. Judge Karas

derived this legal standard from his analysis of various cases.

LegitScript assumes that the same rule of law applies in the Ninth Circuit, but the

standard described by Judge Karas is not the law in the Ninth Circuit. Thus, the issues are not

identical if a different legal standard applies in this Court. Peterson, 451 F.2d at 1292. Indeed,

Judge Karas noted that a decision from the Southern District of New York, or even from the

Second Circuit, is not binding in the District of Oregon in the Ninth Circuit.9 Further, this Court

previously reached the same conclusion.10

As discussed below, because Ninth Circuit precedent provides a different legal standard

than the standard applied by Judge Karas, the issues are not identical. Thus, even if Judge

Karas’s decision was the type of opinion otherwise warranting preclusive effect, LegitScript fails

to show two of the required elements of issue preclusion and the Court would not apply issue

preclusion. Instead, the Court independently evaluates whether the relevant antitrust precedent

dictates summary judgment be granted on LegitScript’s argument that PharmacyChecker has not

suffered antitrust injury and therefore does not have antitrust standing, considering the record

facts in this case.

B. Antitrust Standing and Illegality

Section 1 of the Sherman Act prohibits “[e]very contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or commerce among the several States.” 15

U.S.C. § 1. To establish a § 1 violation, a plaintiff must prove “(1) a contract, combination or

9 PharmacyChecker.com LLC v. Nat’l Ass’n of Bds. of Pharmacy, 2023 WL 4492148,

at *2 (S.D.N.Y. June 5, 2023) (“The Parties fail to explain how their ‘belief’ that additional

finality in the form of a Second Circuit appeal of the purely legal, standing-related question

would ‘shape’ the District of Oregon proceedings. . . . [PharmacyChecker] originally brought

claims against LegitScript LLC, which were severed and transferred to the District of Oregon

upon LegitScript’s motion. However, a Second Circuit decision regarding antitrust standing in

this case would be persuasive at best, and certainly not binding upon a district court in the Ninth

Circuit. As such, judicial administrative interests are not served as suggested by the Parties—

both cases will likely continue in parallel due to choices made by Defendants at the outset of this

case.” (citations to the record omitted)).

10 PharmacyChecker.com LLC v. LegitScript LLC, 2022 WL 17496113, at *3 (D. Or.

Dec. 8, 2022) (denying a motion to stay proceedings and explaining that “[e]ven if the Southern

District of New York grants summary judgment, it is unclear whether Ninth Circuit precedent on

this issue would yield the same result” and that “the Supreme Court has not yet resolved this

question of law, and the law among the circuits may yield different conclusions”).

conspiracy among two or more persons or distinct business entities; (2) by which the persons or

entities intended to harm or restrain trade or commerce among the several States, or with foreign

nations; (3) which actually injures competition.” Brantley v. NBC Universal, Inc., 675

F.3d 1192, 1197 (9th Cir. 2012) (quoting Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1047 (9th

Cir. 2008)). In addition to these three elements, a private plaintiff must also show a fourth—

antitrust standing, which includes antitrust injury. See id.; see also Am. Ad Mgmt., 190

F.3d at 1054-55. In its motion for summary judgment, LegitScript argues that PharmacyChecker

fails to show antitrust standing. In its pending motion, PharmacyChecker does not dispute that

PharmacyChecker can otherwise satisfy the first three elements (the three substantive elements)

of its § 1 claim. For purposes of ruling on LegitScript’s pending motion, the Court therefore

assumes that PharmacyChecker can show that LegitScript and the New York Defendants

violated § 1; the Court considers below only whether LegitScript has demonstrated that

PharmacyChecker cannot establish antitrust injury.

1. Background

In evaluating the New York Defendants’ Rule 12(b)(6) motion to dismiss in the New

York Case, Judge Karas formulated a standard from a set of cases that addressed antitrust injury

when a plaintiff’s business involved illegality: “[W]here the plaintiff’s enterprise is completely

or almost completely illegal, or completely or almost completely geared towards facilitating

illegality, that plaintiff cannot plead an antitrust injury.” PharmacyChecker I, 530 F. Supp. 3d

at 329-30. Judge Karas then applied that standard when ruling on the New York Defendants’

motion for summary judgment and concluded that the New York Defendants “ha[d] met their

burden to prove that [PharmacyChecker’s] enterprise is ‘completely or almost completely geared

towards facilitating illegality.’” PharmacyChecker III, 2023 WL 2973038, at *30 (quoting

PharmacyChecker I).

Invoking that standard, LegitScript now argues in its pending motion that

PharmacyChecker is unable to suffer an antitrust injury as required for antitrust standing

because, according to LegitScript, PharmacyChecker’s business “is completely or almost

completely geared towards facilitating illegality.”11 LegitScript further argues that

PharmacyChecker’s “facilitation” of the unlawful importation of prescription drugs makes

PharmacyChecker’s business itself illegal. PharmacyChecker responds that the standard

described by Judge Karas is inapplicable to the question of antitrust injury because Ninth Circuit

precedent precludes it, and that in any event, PharmacyChecker’s business is entirely legal.

11 Legitscript states that it “is arguing that PharmacyChecker has no standing,” which “is

a threshold issue, and not merely an affirmative defense.” ECF 278 at 17 (emphasis in original).

The Ninth Circuit has identified antitrust injury as an element of proof required for an antitrust

claim. See, e.g., Datagate, Inc. v. Hewlett-Packard Co., 941 F.2d 864, 868 (9th Cir. 1991)

(“Datagate failed to demonstrate causal ‘antitrust’ injury and thus failed to meet its burden of

establishing standing.”). The Ninth Circuit also has held that a defense that negates an element of

a plaintiff’s claim is not an affirmative defense—at least for purposes of Rule 8(c) of the Federal

Rules of Civil Procedure. See Zivkovic v. S. Cal. Edison Co., 302 F.3d 1080, 1088 (9th

Cir. 2002) (“Edison’s attempt to prove that it provided a reasonable accommodation merely

negates an element that Zivkovic was required to prove and therefore was not an affirmative

defense required to be pled in Edison’s answer.”).

The Ninth Circuit, however, has indicated that a defendant’s challenge based on the

plaintiff’s purported illegal activity should be brought as an affirmative defense or, depending on

the circumstances, a counterclaim to offset damages. See Memorex Corp. v. Int’l Bus. Machines

Corp., 555 F.2d 1379, 1380 (9th Cir. 1977); Calnetics Corp. v. Volkswagen of Am., 532 F.2d

674, 689 (9th Cir. 1976); cf. Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1044 (9th

Cir. 2017) (stating in analyzing a claim under the Telephone Consumer Protection Act that

“certain elements of a plaintiff’s claim may be shifted to defendants, when such elements can

fairly be characterized as affirmative defenses or exemptions”). For purposes of LegitScript’s

pending motion, it is irrelevant whether showing PharmacyChecker’s purported illegal activity is

an affirmative defense or showing its legal activity is a part of the element of antitrust injury.

Regardless of which party has the burden of proof, the Court’s conclusion would be the same

because the facts in the record and the binding caselaw leave no doubt that PharmacyChecker

has suffered a cognizable antitrust injury.

2. Analysis

a. Illegality

Based on the facts and law presented by the parties, the Court concludes that

PharmacyChecker’s business is legal. LegitScript has identified no federal or state law that

PharmacyChecker has violated. Nor has LegitScript pointed to any instance of a federal or state

law enforcement agency prosecuting or even threatening to prosecute PharmacyChecker, or any

instance of a federal or state regulatory body taking or even threatening to take any action against

PharmacyChecker (e.g., by issuing a cease-and-desist order). Nor, for that matter, has LegitScript

shown that visitors to PharmacyChecker’s website—including those visitors who click on links

to non-U.S. pharmacies—engage in illegal activity simply by using PharmacyChecker’s website.

LegitScript, however, has produced evidence showing that some number of U.S. visitors

to PharmacyChecker’s website appear to have violated federal law through cross-border

purchase and import of prescription drugs for personal use and that PharmacyChecker’s website

facilitates that illegal activity. PharmacyChecker asserts that it does not track visitor activity after

visitors to its website click through to a pharmacy’s website and that it has no data connecting

clicks to transactions. PharmacyChecker acknowledges, however, that some clicks do, in fact,

lead to transactions and does not dispute that some of those transactions involve U.S.-based

website users who unlawfully import prescription drugs after clicking through to non-U.S. online

pharmacies. The agreed-upon revenue numbers show that approximately 57% of

PharmacyChecker’s total revenue is received from foreign pharmacies based on U.S.-origin

clicks to those pharmacies. It also is reasonable to infer that the non-U.S. pharmacies continue to

pay click-through fees only because there has been sufficient purchasing activity from users of

PharmacyChecker’s website (whether those users are based in the U.S. or elsewhere) to justify

those fees.

The question before the Court, therefore, is whether an antitrust plaintiff, which does not

itself engage in illegal activity, lacks antitrust standing merely because that plaintiff’s website

facilitates illegal activity by others and the plaintiff receives revenue as an indirect result of that

activity. No case from the United States Supreme Court or the Ninth Circuit directly addresses

that question.12 The Court therefore looks to the most factually analogous cases from the

Supreme Court and the Ninth Circuit for guidance to see what sort of illegal activity or

facilitation of illegal activity by a private antitrust plaintiff with an otherwise valid antitrust claim

will negate antitrust standing.

b. Supreme Court Cases

The Court finds guidance in two Supreme Court cases, Kiefer-Stewart and Perma Life,

which abolished traditional equitable defenses as applied to antitrust claims. Kiefer-Stewart Co.

v. Joseph E. Seagram & Sons, Inc., 340 U.S. 211 (1951), overruled on other grounds,

Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984); Perma Life Mufflers, Inc. v. Int’l

Parts Corp., 392 U.S. 134, 140 (1968) (also overruled by Copperweld). The first of these

defenses, abolished in Kiefer-Stewart, is “unclean hands,” which “refers to the plaintiff’s

wrongdoing against a third party with respect to the subject matter of the suit.” Memorex Corp.

v. Int’l Bus. Machines Corp., 555 F.2d 1379, 1382 (9th Cir. 1977). In Kiefer-Stewart, the

plaintiff, a liquor wholesaler, alleged that the defendants, who sold liquor to wholesalers, had

illegally conspired to sell liquor only to those wholesalers who would resell the liquor at

specified maximum prices. Kiefer-Stewart, 340 U.S. at 212.

12 The most factually analogous case is a non-binding decision from the Seventh Circuit,

Maltz v. Sax, 134 F.2d 2 (7th Cir. 1943). As discussed below, however, the facts of that case still

are distinguishable and that case has since been overruled, at least in part.

At trial, the defendants introduced evidence showing that the plaintiff had illegally

conspired with other wholesalers to set minimum prices, but the district court instructed the jury

that the plaintiff’s participation in that separate conspiracy, even if proved, could not be raised as

a defense. The Supreme Court agreed and explained:

If [the plaintiff] and others were guilty of infractions of the

antitrust laws, they could be held responsible in appropriate

proceedings brought against them by the Government or by injured

private persons. The alleged illegal conduct of [the plaintiff],

however, could not legalize the unlawful combination by [the

defendants] nor immunize them against liability to those they

injured.

Id. at 214. Thus, although an antitrust plaintiff that engaged in illegal activity “may be vulnerable

to prosecution or held liable by a party injured as a result” of that activity, “defendants cannot

avoid liability to [the plaintiff] for their own antitrust conspiracy by alleging that [the plaintiff] is

culpable for a distinct infraction.” Burlington Indus. v. Milliken & Co., 690 F.2d 380, 388 (4th

Cir. 1982); see also Memorex, 555 F.2d at 1381 (“‘Unclean hands’ has not been recognized as a

defense to an antitrust action for many years.” (citing Kiefer-Stewart)).

Similarly, the equitable defense of in pari delicto (of equal fault), which “refers to the

plaintiff’s participation in the same wrongdoing as the defendant,” does not bar an otherwise

valid antitrust claim. Memorex, 555 F.2d at 1382. In Perma Life, franchisee-operators of Midas

Muffler Shops entered into sales agreements with Midas, Inc. (Midas) and later brought an

antitrust suit against Midas challenging restrictions in those same agreements. Perma Life, 392

U.S. at 140. The court of appeals held that the plaintiffs’ claim was barred by the doctrine of in

pari delicto because the plaintiffs “had enthusiastically sought to acquire a Midas franchise with

full knowledge” of the restrictive provisions in the agreements. Id. at 137-38. The Supreme

Court disagreed, holding that “the doctrine of in pari delicto . . . is not to be recognized as a

defense to an antitrust action.” Id. at 138. In a discussion later quoted by the Ninth Circuit in

several key antitrust cases, the Supreme Court explained:

[T]he purposes of the antitrust laws are best served by [e]nsuring

that the private action will be an ever-present threat to deter

anyone contemplating business behavior in violation of the

antitrust laws. The plaintiff who reaps the reward of treble

damages may be no less morally reprehensible than the defendant,

but the law encourages his suit to further the overriding public

policy in favor of competition. A more fastidious regard for the

relative moral worth of the parties would only result in seriously

undermining the usefulness of the private action as a bulwark of

antitrust enforcement.

Id. at 139.13

Echoing its decision in Kiefer-Stewart, the Supreme Court noted that “permitting the

plaintiff to recover a windfall gain does not encourage continued violations by those in his

position since they remain fully subject to civil and criminal penalties for their own illegal

conduct.” Id. (citing Kiefer-Stewart);14 see also Javelin Corp. v. Uniroyal, Inc., 546

F.2d 276, 279 (9th Cir. 1976) (holding that, with a narrow exception, a founding member of an

antitrust conspiracy can bring an antitrust claim against co-conspirators); Volvo N. Am. v. Men’s

Int’l Pro. Tennis Council, 857 F.2d 55, 68 (2d Cir. 1988) (holding that “a cartel member has

13 The Supreme Court in Perma Life cited both Kiefer-Stewart and Simpson v. Union Oil

Co. of California, 377 U.S. 13 (1964). In Simpson, the Supreme Court held that a lessee of a

retail outlet who had signed an agreement making him “a participant in the illegal, competition-

destroying scheme” could nonetheless bring suit under the antitrust laws. See Perma Life, 392

U.S. at 138-39 (construing Simpson).

14 The Supreme Court in Perma Life did not foreclose the possibility that a plaintiff’s

“truly complete involvement in a monopolistic scheme could ever be a basis . . . for barring a

plaintiff’s cause of action,” but clarified that such a bar would be “wholly apart from the idea of

in pari delicto.” Perma Life, 392 U.S. at 140. The Ninth Circuit has since held that a defendant

may be able to defend itself from an antitrust claim by showing that the plaintiff was involved in

the same anticompetitive conspiracy at issue, but only if “the degree of participation of the

plaintiff” had been “equal to that of any defendant and a substantial factor in the formation of the

conspiracy.” Javelin Corp. v. Uniroyal, Inc., 546 F.2d 276, 279 (9th Cir. 1976).

antitrust standing to challenge the cartel to which it belongs,” provided that certain conditions are

met (citing Perma Life, among other cases)). Although Perma Life addressed only illegality

involving an antitrust plaintiff’s “concurrent violation of the antitrust laws, it has been

understood to have abolished the defense of illegality even when the plaintiff’s wrongdoing is

unrelated to antitrust policy.” Consol. Exp., Inc. v. N.Y. Shipping Ass’n, 602 F.2d 494, 526 (3d

Cir. 1979) (collecting cases), vacated on other grounds sub nom. Int’l Longshoremen’s Ass’n v.

Consol. Exp., Inc., 448 U.S. 90 (1980).

c. Ninth Circuit Cases

As the Ninth Circuit has explained, the “common nucleus” of unclean hands and in pari

delicto is “illegality on the part of the plaintiff.” Memorex, 555 F.2d at 1381. In two key

decisions, the Ninth Circuit, relying on the principles set forth in in Kiefer-Stewart and Perma

Life, similarly rejected the defendants’ attempts to use the plaintiffs’ illegal conduct to immunize

the defendants’ liability.

i. Calnetics

In Calnetics, the plaintiff (a seller of automobile air-conditioners), alleged that the

defendants (which included a Volkswagen subsidiary and an automobile distributor), engaged in

a conspiracy that displaced Calnetics from the market. Calnetics Corp. v. Volkswagen of Am.,

Inc., 532 F.2d 674, 679-80 (9th Cir. 1976). At trial, Calnetics sought to introduce evidence of

actual sales of its products, which was necessary to show that the defendants’ conspiracy

diminished Calnetics’ anticipated sales. The district court excluded that evidence on the ground

that the sales had stemmed from an illegal agreement between Calnetics and an automobile

distributor. Id. at 688. Without evidence of actual sales, Calnetics could not show that it had

suffered damages, and the district court therefore granted summary judgment in favor of the

defendants against Calnetics’ antitrust claims. The Ninth Circuit reversed.

Citing Perma Life and Kiefer-Stewart, the Ninth Circuit explained that the defendants’

challenge to the evidence at issue was “in effect an in pari delicto or ‘unclean hands’ defense,

which is not a defense in an action for treble damages.” Id. The court quoted at length Perma

Life’s discussion of the antitrust laws’ purposes, including the need to ensure that a private cause

of action “will be an ever-present threat to deter anyone contemplating business behavior in

violation of the antitrust laws,” irrespective of the “relative moral worth of the parties.” Id.

(quoting Perma Life, 392 U.S. at 139.). Considering these purposes, the Ninth Circuit found “no

legitimate reason for distinguishing [the] defendants’ ‘illegal sales’ argument from the in pari

delicto type of defense struck down in Perma Life.” Id. at 689.

The question in Calnetics was whether the district court properly had excluded the

plaintiff’s evidence of damages, and not whether the plaintiff had antitrust standing. But the

Ninth Circuit’s emphasis on the policies effectuated by the antitrust laws and the court’s

supporting analysis are relevant to whether a plaintiff’s involvement in illegal activity—even

direct involvement, as was the case in Calnetics—should deprive that plaintiff of a private cause

of action under the antitrust laws. Notably, the Ninth Circuit in Calnetics approvingly cited a

then-recent district court decision in which that court rejected an asserted defense of illegality,

even though the plaintiff would not have had acquired an antitrust claim but for its own illegal

activity:

From a practical point of view, Calnetics is in a position no

different from that of the plaintiff in Purex Corp. v. General Foods

Corp., 318 F. Supp. 322 (C.D. Cal. 1970), who had acquired an

antitrust cause of action by virtue of an acquisition which was

itself illegal. Recognizing the asserted defense of illegality as a

species of in pari delicto, the Purex court rejected it.

Id. at 689. The Ninth Circuit also approved of the Tenth Circuit’s decision in Semke v. Enid

Automobile Dealers Ass’n, 456 F.2d 1361 (10th Cir 1972), in which that court concluded that the

plaintiff “was entitled to prove damages his business suffered, even though at the time of injury

[he] may have been illegally engaged in the automobile retail business.” Id. (construing

Semke).15

Relying on the overarching policies of the antitrust laws, the Ninth Circuit concluded that

“even though the market position from which Calnetics was displaced had been attained only

through illegal conduct” and Calnetics was thereby subject to civil and criminal penalties,

Calnetics was not required to lose its antitrust action. Id. As the court explained, “[t]o rule

otherwise would effectively frustrate the important public policy underl[y]ing the antitrust laws:

encouragement of private antitrust suits in order to deter the illegal exercise of market power.”16

ii. Memorex

In Memorex, the Ninth Circuit directly addressed whether a plaintiff’s illegal activity

meant that it could not show antitrust standing. Memorex, 555 F.2d at 1381-83. The defendant

(IBM) argued that the plaintiff (Memorex) had acquired its presence in the market for disk

storage devices—the same market that, according to Memorex, had been injured by IBM’s

allegedly anti-competitive acts—only because Memorex had stolen trade secrets from IBM.

Asserting a so-called “unlawful market presence” defense, id. at 1381, IBM argued that

15 In Semke, the Tenth Circuit concluded that the plaintiff had, in fact, violated a state

statute that provided for criminal and civil penalties, although the court also concluded that there

had been “a basis for the plaintiff to question whether the statute applie[d] to his activities.” 456

F.2d at 1363, 1364 n.1, 1368.

16 In support, the Ninth Circuit cited Lanier Business Products v. Graymar Co., 355 F.

Supp. 524 (D. Md. 1973), in which the court rejected an affirmative defense that was based on

the unlawful antitrust activity of the plaintiff. As that court explained: “It would be intolerable to

excuse the continuation of conduct detrimental to the common good because of the equally

egregious actions of another.” Id. at 526.

Memorex had no “business” of its own, as required to satisfy the Clayton Act’s requirement that

a plaintiff “be injured in his business.” See 15 U.S.C. § 15(a).

The Ninth Circuit explained that IBM’s defense of “unlawful market presence” and the

traditional equitable defenses of unclean hands and in pari delicto shared a “common nucleus”—

illegality. Memorex, 555 F.2d at 1381. In rejecting IBM’s argument that Memorex did not suffer

a cognizable injury because it had engaged in illegal activity, the Ninth Circuit found compelling

the reasoning in Calnetics, and again cited Purex and Semke:

Were it not for Calnetics’ allegedly illegal conduct, it would not

have suffered any injury because it would not have sold any

products to Volkswagen distributors. All sales were the result of

commercial bribery. In effect, Calnetics claimed only an “illegal

market presence” much as IBM suggests Memorex does here. The

“rights” of Calnetics were no greater than those of Memorex, even

assuming Memorex stole the patents from which its products were

made.

Memorex therefore had “rights” which could be injured by the

wrongdoing of IBM. This is all that is required to maintain a

private antitrust suit. Memorex’s own illegal conduct did not

divest it of an antitrust action. See also Semke v. Enid Automobile

Dealers Association, 456 F.2d 1361 (10[th] Cir. 1972) (rejecting

defense that plaintiff’s entire business was illegal because it was

unlicensed); Purex Corp. v. General Foods Corp., 318 F.

Supp. 322 (C.D. Cal. 1970) (recognizing asserted defense of

illegality as a species of in pari delicto).

Id. at 1381-82 (emphasis added; footnote omitted).17 Rejecting IBM’s argument that Memorex’s

illegal activity meant that it could not sustain an antitrust injury, the Court declared: “We

continue to side with the goal of vigorous enforcement of our antitrust laws.” Id. at 1383.

The holding of Memorex was confined to IBM’s defense of “unlawful market presence,”

which was based on Memorex’s alleged theft of trade secrets from IBM: the court held that

17 In a footnote, the Ninth Circuit added that “Memorex, like Calnetics, was subject to

civil action and even criminal penalties for its wrongdoing.” Memorex, 555 F.2d at 1382 n.3.

“illegality is not to be recognized as a defense to an antitrust action when the illegal acts by the

plaintiff are directed against the defendant.”18 Id. at 1382 (emphasis added). The court, however,

recognized that in some instances a plaintiff’s violation of the law may bar an antitrust action.

See id. at 1382 n.5; id at 1383 (citing Javelin’s holding that a plaintiff will be barred from

recovery when the illegal conspiracy of the defendants “would not have been formed but for the

plaintiff’s participation”). Nonetheless, the analysis and policies underlying the court’s holding

in Memorex apply here. As the Ninth Circuit has explained, the same principle underlies Kiefer-

Stewart, Perma Life, Calnetics, and Memorex: “a plaintiff’s illegal conduct cannot be raised as a

complete bar to his antitrust action.” First Beverages, Inc. v. Royal Crown Cola Co., 612

18 The fact that the alleged illegal activity at issue in Memorex involved a plaintiff’s theft

of a defendant’s trade secrets may be why the Ninth Circuit referred to that activity as a “private

wrong” even though Memorex would have been subject to criminal penalties for such

wrongdoing. See 555 F.2d at 1382; id. at 1382 n.3. LegitScript argues that Memorex does not

apply because the court held only that a “private wrong” does not eliminate antitrust injury,

whereas “[PharmacyChecker’s] illegal conduct is a public wrong.” ECF 271 at 21 (emphasis in

original). Assuming without deciding that the cross-border importation of prescription drugs

engaged in by users of PharmacyChecker’s website is a “public wrong,” and setting aside the

fact that LegitScript has not shown that PharmacyChecker’s conduct itself is illegal, the Court

finds no reason why the reasoning and principles in Memorex should apply only those defenses

that are based on a plaintiff’s “private” illegal acts but not to the illegality defense asserted here.

In Memorex, the Ninth Circuit relied on several decisions in which courts rejected

illegality defenses, including Kiefer-Stewart and Perma Life, both of which involved asserted

defenses that were based on the plaintiff’s alleged antitrust violations. See Kiefer-Stewart, 340

U.S. at 214; Perma Life, 392 U.S. at 139-40; see also Radovich v. Nat. Football League, 352

U.S. 445, 454 n.10 (1956) (noting that violations of antitrust laws are regarded as “a special form

of public injury” (emphasis in Radovich) (quoting Apex Hosiery Co. v. Leader, 310 U.S. 469,

493 (1940)). In Calnetics, where the Ninth Circuit rejected the defendants’ “illegal sales”

argument as equivalent to “the in pari delicto type of defense struck down in Perma Life,” the

plaintiff’s alleged illegality also involved an antitrust violation. See Calnetics, 532 F.2d

at 688-89; see also Purex, 318 F. Supp. at 323-24 (rejecting affirmative defenses that were based

on the plaintiff’s alleged antitrust violation); Semke, 456 F.2d at 1367-70 (rejecting a defense

based on the plaintiff’s violation of a state licensing statute).

F.2d 1164, 1174 (9th Cir. 1980).19 It is worth emphasizing that Kiefer-Stewart, Perma Life,

Calnetics, and Memorex, along with Purex and Semke, all involved defenses based on illegal

activity in which a plaintiff was alleged to have directly participated. PharmacyChecker itself,

however, has broken no law; it is merely facilitating illegal activity by third parties, among other

lawful activities.

iii. Other Caselaw

LegitScript relies on several cases in which courts have concluded that a plaintiff that

engaged in or sought to engage in illegal activity lacked antitrust standing. For the reasons

discussed below, the Court finds those cases inapplicable, inconsistent with controlling law, or

otherwise unpersuasive.

In several cases involving antitrust plaintiffs who had been involved in illegal activity,

courts have concluded that the plaintiffs lacked injury because they failed to establish that their

damages had been caused by anticompetitive acts. LegitScript relies on Realnetworks, in which

the plaintiff, who sought to market a product (RealDVD) that would allow the copying of DVDs,

asserted that the defendant movie production studios’ refusal to license the copying of DVDs

caused the plaintiff an antitrust injury. Realnetworks, Inc. v. DVD Copy Control Ass’n, 2010

WL 145098 at *1-2, 5 (N.D. Cal. Jan. 8, 2010). In that case, the defendants sought a temporary

restraining order and then a preliminary injunction barring the plaintiff’s manufacture and

distribution of RealDVD. The court granted both, concluding they were “necessitated by [the

plaintiff’s] own possibly unlawful conduct.” Id. at *5. The court in Realnetworks concluded that

the plaintiff had failed to allege a plausible antitrust injury, not because the plaintiff had engaged

19 As discussed, the Ninth Circuit in Javelin identified a narrow exception. The Court

acknowledges that other exceptions may apply in factual circumstances not relevant here, such as

when a plaintiff’s entire business is illegal and that plaintiff is subject to criminal punishment.

in illegal activity but because the harm that the plaintiff suffered resulted from the court’s

injunctions. Id.; see also id. at *6 (“The Court does not here hold that Real is barred from

maintaining an antitrust claim because it has engaged in illegal activity[.]”); cf. Snake River

Valley Elec. Ass’n v. PacificCorp, 357 F.3d 1042, 1050 n.8 (9th Cir. 2004) (“Because the statute

does not permit the transfer of customers by mere private action (i.e., PacificCorp could not yield

customers [to the plaintiff], without state approval from the PUC, even if it wanted to do

so), . . . the statute in question precludes the element of causal antitrust injury . . . even if

PacificCorp acted anti-competitively . . . .” (citation omitted)).

Thus, Realnetworks did not address whether a plaintiff’s own illegal activity or

facilitation of illegal activity by others, without more, negates antitrust injury. Rather, the court

found merely that effects that flowed from the plaintiff’s intended (and likely illegal) activity—

the resulting injunctions—were the actual cause of the asserted injury. Here, however,

LegitScript has not shown evidence to support its argument that “[PharmacyChecker] would

have suffered the same injury regardless of LegitScript’s conduct due to enforcement by the

FDA, Secretary of Health and Human Services, or enforcement agencies such as U.S. Customs

Border Patrol.” See ECF 278 at 19 (emphasis added). LegitScript has offered no evidence of any

such enforcement activity or even threatened enforcement activity. Realnetworks, therefore, is

inapposite.

LegitScript also relies on the Eighth Circuit’s decision in In re Canadian Import Antitrust

Litigation, 470 F.3d 785 (8th Cir. 2006). The plaintiffs in this class action were U.S.-based

consumers who purchased prescription drugs from the defendant drug companies. The plaintiffs

alleged that the defendants unlawfully conspired to suppress the importation of certain

prescription drugs from Canadian pharmacies, thereby resulting in increased prices for

prescription drugs sold in the United States. Id. at 787-88. The district court “concluded that the

plaintiffs lacked standing to pursue their federal antitrust claims because the allegedly

anticompetitive behavior discouraged only unlawful importation of drugs and not lawful activity

that the Sherman Act was designed to protect.” Id. at 788. On appeal, the plaintiffs argued that

the importation of the drugs at issue was not, in fact, illegal; in the alternative, they argued that

even if such importation was illegal, they nonetheless could pursue an antitrust claim based on

the defendants’ anticompetitive conduct. Id. at 788, 791.

The Eighth Circuit concluded, first, that such importation would have violated federal

law because the drugs at issue were not labeled in conformity with federal requirements. Id.

at 788-91.20 The court then addressed the plaintiffs’ alternative argument that they could still

maintain their antitrust claim. Notably, the Eighth Circuit did not conclude that the plaintiffs’

antitrust claim was barred as a matter of law because the plaintiffs sought to achieve their goal

(lower prescription drug prices in the United States) by furthering activity that was illegal

(importation of drugs not labeled in conformity with federal law). Rather, the court concluded

that the plaintiffs’ claim was barred because the plaintiffs could not demonstrate any injury

caused by the defendants’ conduct. The court explained:

Plaintiffs allege that they are injured by increased prices for

prescription drugs in the United States, which they say result from

their inability to import less expensive drugs distributed by

Canadian pharmacies. As we have explained, however, the

importation of drugs from Canada is prohibited by federal law. The

absence of competition from Canadian sources in the domestic

prescription drug market, therefore, is caused by the federal

statutory and regulatory scheme adopted by the United States

government, not by the conduct of the defendants. Consequently,

20 LegitScript relies on In re Canadian Import in part for the Eighth Circuit’s conclusion

that importation of the drugs at issue in that case was illegal. See 470 F.3d at 789.

PharmacyChecker, however, does not import drugs from non-U.S. pharmacies; nor has

LegitScript shown that PharmacyChecker’s business itself is otherwise illegal.

the alleged conduct of the defendants did not cause an injury of the

type that the antitrust laws were designed to remedy. See RSA

Media, Inc. v. AK Media Group, Inc., 260 F.3d 10, 15 (1st

Cir. 2001) (plaintiff lacked antitrust standing where it “was not

excluded from the market for outdoor billboards because of

[defendant’s] threats,” but rather “because of the Massachusetts

regulatory scheme that prevents new billboards from being

built”); City of Pittsburgh v. West Penn Power Co.,147

F.3d 256, 265 (3d Cir. 1998) (City suffered no antitrust injury and

had no antitrust standing because “any injury suffered by the City

did not flow from the defendants’ conduct, but, rather, from the

realities of the regulated environment in which all three were

actors”); 2 P. Areeda & H. Hovenkamp, Antitrust Law § 338,

at 320 (2d ed. 2000) (explaining that antitrust standing is lacking

where “a force other than the antitrust violation fully accounts for

the plaintiff’s injury”).

In re Canadian Import, 470 F.3d at 791-92 (alteration in original). In re Canadian Import does

not apply here for the same reasons, discussed above, that Realnetworks is inapposite. See

Rebotix Repair, LLC v. Intuitive Surgical, Inc., 2022 WL 3272538, at *8 (M.D. Fla. Aug. 10,

2022) (concluding that cases such as In re Canadian Import “stand for the proposition that a

regulatory or legislative bar can factually break the chain of causation between an antitrust

defendant’s challenged conduct and the plaintiff’s injury” (emphasis in original)).

LegitScript’s reliance on Pearl Music Co. is similarly unavailing. See Pearl Music Co. v.

Recording Indus. Ass’n of Am., Inc., 460 F. Supp. 1060 (C.D. Cal. 1978). The plaintiffs in that

case were engaged in a tape piracy business that was “by its very nature, entirely illegal.” Id.

at 1068. The court concluded that that the “almost total magnitude” of the plaintiffs’ illegal

conduct made the plaintiffs’ “miniscule conduct that may be legal, insignificant.” Id. The court in

Pearl Music therefore concluded that the plaintiffs “should not be able to assert or claim that

they have rights protected by the antitrust laws.”21 Id.; cf. Bubis v. Blanton, 885 F.2d 317, 320

21 The court in Pearl Music distinguished Memorex and Calnetics on the ground that

neither of those cases “present a factual pattern as is present here that is, one in which the

(6th Cir. 1989) (affirming dismissal of antitrust claim for lack of standing because the plaintiff’s

interest in the allegedly harmed business was entirely illegal). Even if correctly decided, Pearl

Music is distinguishable: the evidence in the record does not show that any aspect of

PharmacyChecker’s business is illegal—let alone “entirely illegal.”22

The case with facts most analogous to those here is Maltz v. Sax, 134 F.2d 2 (7th

Cir. 1943).23 That case, however, is distinguishable and has been overruled at least in part. In

Maltz, the court held that the plaintiff, whose business was “limited to making and selling

gambling apparatus,” could not bring an antitrust claim for two reasons. Id. at 4. First, the

plaintiff “[came] into court with unclean hands.” Id. at 5. Second, the plaintiff’s business was

limited to the making and selling of products usable only for activities that were unlawful or

“consistently condemned . . . as against public policy,” and he therefore had “no legal rights to

protect.” Id. at 4, 5.

plaintiff is engaged in a business which is, by its very nature, entirely illegal.” 460 F. Supp.

at 1068.

22 Even if the Court agreed with LegitScript that the facilitation of illegal activity is itself

illegal or otherwise equivalent to illegal activity, Pearl Music and similar cases would still be

distinguishable. PharmacyChecker’s facilitation of illegal activity only applies to actual drug

purchases made by U.S. consumers at foreign pharmacies. The evidence in the record of such

actual transactions includes LegitScript’s evidence of PharmacyChecker assisting three

consumers after problems occurred with their purchases and PharmarcyChecker’s evidence that

one pharmacy indicated that 3.47% of clicks from PharmacyChecker’s website resulted in drug

purchases. At summary judgment, the Court views the evidence in the light most favorable to the

nonmoving party. Even accepting LegitScript’s argument that facilitation of cross-border

importation of drugs is itself illegal, the evidence does not show that only a “miniscule” or

“insignificant” portion of PharmacyChecker’s business is legal. See Pearl Music, 460 F. Supp.

at 1068. To the contrary, the evidence shows no more than a “miniscule” or “insignificant”

amount of the purportedly illegal activity.

23 No circuit court has cited Maltz approvingly in more than 45 years, and the Seventh

Circuit has not cited it in nearly 70 years. The most recent appellate case to cite Maltz

approvingly was Memorex—for the limited proposition that some injury must occur before a

plaintiff can recover. Memorex, 555 F.2d at 1383.

As discussed earlier, the equitable defense of unclean hands is no longer recognized as a

defense to an antitrust action. See Kiefer-Stewart, 340 U.S. at 212; Memorex, 555 F.2d at 1381.

As for the Seventh Circuit’s conclusion that plaintiff had “no legal right in a business, the

conduct of which was gambling,” Maltz, 134 F.2d at 5, the facts in this case are distinguishable.

PharmacyChecker does have a legal right in its business. Moreover, PharmacyChecker’s

business is not “limited to the making and selling” of products usable only for activities that are

unlawful or that have been “consistently condemned . . . as against public policy.”24 See id. at 4.

3. Final Thoughts

Even when an antitrust plaintiff has directly engaged an illegal activity that unequivocally

constitutes a public harm, the Supreme Court has held that such harm must be addressed, if at all,

by means other than depriving the plaintiff of an otherwise valid antitrust cause of action or

immunizing the antitrust defendants. See Kiefer-Stewart, 340 U.S. at 214 (holding that if the

plaintiff had violated antitrust laws in an unrelated conspiracy, the plaintiff “could be held

responsible in appropriate proceedings brought . . . by the Government or by injured private

persons,” but that such illegal conduct “could not legalize the unlawful combination of [the

defendants] nor immunize them against liability to those they injured”); Perma Life, 392 U.S.

24 Further, the Seventh Circuit’s reliance on public policy considerations likely do not

survive Perma Life, and Maltz may therefore have been overruled in another respect. Compare

Maltz, 134 F.2d at 4 (discussing “against-public-policy businesses practices which include the

use of gambling machines” and noting that “[f]ederal courts have consistently condemned

[gambling] as against public policy”); and id. at 6 (concluding that a “construction of the

Sherman Act” that would bar the plaintiff’s claim was “[m]ore consistent with our general public

policy”); with Perma Life, 392 U.S. at 139 (noting “the overriding public policy in favor of

competition” and explaining that “a more fastidious regard for the relative moral worth of the

parties would only result in seriously undermining the usefulness of the private action as a

bulwark of antitrust enforcement”); see also Consol. Exp., 602 F.2d at 526 n.21 (“The appellees

also rely on Maltz v. Sax. We do not believe that holding survives Perma Life.” (citation

omitted)).

at 134 (similar); cf. Memorex, 555 F.2d at 1382 & n.3 (noting that the plaintiff was subject to

“civil action and even criminal penalties for its wrongdoing” but holding that “[a] wrongful act

committed against one who violates the antitrust laws must not become a shield in the violator’s

hands against operation of the antitrust laws”). The Ninth Circuit has held that the same principle

applies, even when a plaintiff would not have acquired an antitrust cause of action but for the

plaintiff’s illegal activity. See Calnetics, 532 F.2d at 689; Memorex, 555 F.2d at 1381-82.

Under Ninth Circuit law, even direct involvement by a plaintiff in illegal activity “cannot

be raised as a complete bar to his antitrust action.” First Beverages, 612 F.2d at 1174 (construing

Kiefer-Stewart, Perma Life, Calnetics, and Memorex).25 It would contravene Supreme Court and

Ninth Circuit precedent for this Court to fashion a new rule that deprives a plaintiff of an

antitrust cause of action and immunize an antitrust defendant when the plaintiff’s business is

entirely legal. That is so even if the plaintiff’s website is used for purposes of facilitating

unlawful activity by others and the plaintiff indirectly derives revenue (even a large portion of its

revenue) from that activity. See Perma Life, 392 U.S. at 139 (noting “the overriding public

policy in favor of competition” and admonishing that weighing the “relative moral worth of the

parties would only result in a seriously undermining the usefulness of the private action as a

bulwark of antitrust enforcement”); cf. Radovitch v. Nat’l Football League, 352 U.S. 445, 453

(1957) (“In the face of [the Congressional policy underlying the antitrust laws], this Court should

not add requirements to burden the private litigant beyond what is specifically set forth by

Congress in those laws.”). Thus, at this stage of the lawsuit, LegitScript has not met its burden to

25 Again, the Ninth Circuit in Javelin identified a narrow exception, and the Court

acknowledges that other exceptions may apply, such as when a plaintiff’s entire business is itself

illegal.

justify summary judgment based on its argument that PharmacyChecker lacks either antitrust

injury or antitrust standing.

CONCLUSION

The Court DENIES Defendant LegitScript’s Motion for Summary Judgment. ECF 271.

The Court also DENIES AS MOOT Defendant’s Renewed Motion to Stay Discovery. ECF 269.

IT IS SO ORDERED.

DATED this 3rd day of January, 2024.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge