Omnicare, Inc. v. Unitedhealth Group, Inc.

In the

United States Court of Appeals

For the Seventh Circuit

No. 09-1152

O MNICARE, INC.,

Plaintiff-Appellant,

v.

U NITEDH EALTH G ROUP, INC.,

P ACIFIC ARE H EALTH S YSTEMS, INC.,

and R XS OLUTIONS, INC., d/b/a

P RESCRIPTION S OLUTIONS,

Defendants-Appellees.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 06 C 6235—Rebecca R. Pallmeyer, Judge.

A RGUED N OVEMBER 13, 2009—D ECIDED JANUARY 10, 2011

BeforeK ANNE and T INDER, Circuit Judges, and

G RIESBACH, District Judge.Œ

Œ

The Honorable William C. Griesbach, United States District

Judge for the Eastern District of Wisconsin, sitting by designa-

tion.

2 No. 09-1152

T INDER, Circuit Judge. In the months leading up to the

2006 launch of Medicare Part D, institutional pharmacy

Omnicare entered into separate service contracts with

merging Medicare Part D plan sponsors UnitedHealth

Group and PacifiCare. The terms of the UnitedHealth

Group contract were favorable to Omnicare; the terms

of the PacifiCare contract, which Omnicare signed with-

out negotiation, were significantly less so. Shortly after

the UnitedHealth Group-PacifiCare merger was finalized,

UnitedHealth Group abandoned its contract with Omni-

care and joined PacifiCare’s. Omnicare cried foul and

filed a Sherman Act claim, alleging that UnitedHealth

Group and PacifiCare conspired to depress the rate of

reimbursement it would receive. It also raised a host of

additional claims, including state antitrust claims and

common law fraud, conspiracy to commit fraud and

unjust enrichment claims. The district court granted

summary judgment to the insurers and denied Omnicare’s

cross motion for partial summary judgment. Omnicare

appeals, and we affirm.

I. Background

Plaintiff-appellant Omnicare is the nation’s largest

institutional pharmacy. It provides pharmaceutical

services to long-term care facilities, such as nursing

homes, in 47 states. Defendant-appellee UnitedHealth

Group (“United”) is a large national provider of health

insurance. It acquired defendant-appellee PacifiCare, a

smaller, California-based health insurer, on December 20,

2005. As part of that acquisition, United also became the

No. 09-1152 3

owner of PacifiCare’s wholly owned subsidiary, defendant-

appellee RxSolutions, a “pharmacy benefits manager”

(“PBM”) that negotiates contracts with pharmacies and

processes claims from plan members. See In re Pharmacy

Benefits Managers Antitrust Litig., 582 F.3d 432, 434 (3d

Cir. 2009) (describing PBMs).

United and PacifiCare began their merger talks in

early 2005, while each was developing an individual

Medicare Part D plan proposal. Medicare Part D, a new

government-subsidized prescription drug program for

seniors and disabled individuals, was scheduled to

“go live” on January 1, 2006, and the Centers for Medi-

care and Medicaid Services (“CMS”) required private

insurers to submit their plan proposals for consideration

by August 1, 2005. Insurers whose plans were approved

would be permitted to enter into contracts with CMS

and begin providing benefits to Medicare Part D enrollees

in January 2006. Before their plans could be approved,

plan sponsors had to demonstrate to CMS that they had

in place pharmacy networks capable of serving their

anticipated enrollees. To assemble these networks, which

had to include enough retail and institutional pharmacies

to provide “convenient access” for enrollees, including

Medicaid-eligible individuals who would be randomly

assigned to Part D plans in late 2005, plan sponsors had

to negotiate reimbursement contracts with numerous

pharmacies. Both United and PacifiCare were negotiating

contracts with Omnicare during the period of due dili-

gence preceding their merger.

PacifiCare employed its in-house PBM RxSolutions

to conduct its negotiations with Omnicare. By all

4 No. 09-1152

accounts the negotiations did not proceed smoothly. In

early June 2005, RxSolutions sent to Omnicare a copy of

PacifiCare’s “any willing provider” contract, a form

contract that CMS required Part D plan sponsors to

develop and make available to any pharmacy willing to

sign it. Omnicare in turn sent RxSolutions its own form

contract, which included eighteen “Patient Protections”

that Omnicare developed to address the special needs

of long-term care patients. Omnicare and RxSolutions

attempted to negotiate, but because each insisted on

using its own form contract as the starting point they

never made it out of the gate. By mid-July, eight days

after United and PacifiCare signed their formal merger

agreement, negotiations between Omnicare and Pacifi-

Care broke down completely when PacifiCare, citing

price concerns, walked away from the table. Omnicare

assured PacifiCare that it would “stand ready to negoti-

ate,” but PacifiCare eschewed Omnicare’s overtures

and submitted its Part D bid to CMS without Omnicare

in its pharmacy network. After its application was

rejected, PacifiCare reopened negotiations with other

pharmaceutical service providers, including Omnicare’s

competitor Managed Healthcare Associates, Inc., to

remedy deficiencies in its pharmacy network. PacifiCare

secured CMS approval for its Part D plan in Septem-

ber 2005 without Omnicare in its network.

United also enlisted the assistance of a PBM, Walgreens

Health Initiatives (“WHI”), to negotiate with Omnicare

on its behalf. After some back-and-forth over reimburse-

ment rates, WHI and Omnicare were able to agree on a

contract under which Omnicare would provide pharma-

No. 09-1152 5

ceutical services to United’s Part D enrollees who lived

in Omnicare-contracted long-term care facilities. United,

to whom the enrollees would pay their premiums, would

then reimburse Omnicare at a rate of AWP-12% plus a

fixed dispensing fee per prescription filled.1 This reim-

bursement rate was comparable to the rates Omnicare

negotiated with most other health insurers. The United-

Omnicare contract, which was executed on July 29, 2005,

included Omnicare’s eighteen “Patient Protections.”

United submitted its bid to CMS, with Omnicare in

its pharmacy network, and received approval to operate

an extensive Part D plan. Shortly after signing its con-

tract with Omnicare and securing CMS approval, how-

1

“AWP” stands for “average wholesale price,” which is the

published price a pharmacy is supposed to pay when it

acquires a drug from a wholesaler. The actual prices phar-

macies pay are typically lower than AWP, which has been

characterized as a suggested retail price and likened to a

“sticker price” on a new car. See, e.g., In re Pharm. Indus. Average

Wholesale Price Litig., 582 F.3d 156, 165 (1st Cir. 2009). Appellees

report that the average pharmacy actually pays wholesalers

AWP-22% for prescription drugs. Assuming this number is

accurate for the sake of example, Omnicare would pay $78 to

get a drug with an AWP of $100, but would be reimbursed

$88, plus a per-transaction dispensing fee, when it sold the

drug to a United Part D plan enrollee. It is in Omnicare’s inter-

est to maximize its reimbursement rate by negotiating a low

percentage discount from AWP and a high dispensing fee. It

contrast, it is in United’s (and other insurers’) interest to

minimize the rate it pays to Omnicare by negotiating a high

percentage discount from AWP and a low dispensing fee.

6 No. 09-1152

ever, United enlisted outside counsel to advise it on the

legality of the “Patient Protections” and other Omnicare-

engineered provisions in the contract. It did not apprise

Omnicare of its concerns and expressly forbade its

PBM from doing so.

While the Part D network negotiations and proposal

developments were winding down, the merger between

United and PacifiCare was picking up. Both insurers

had due diligence teams in place, and by early

June 2005, the teams were meeting regularly to discuss a

variety of topics, including PacifiCare’s plans for its

Part D program. United tried to assuage its concerns

about PacifiCare’s Part D readiness by giving PacifiCare

a list of “Part D Questions” to answer. In its responses,

PacifiCare revealed that its expected reimbursement rate

for network pharmacies was AWP-16%. PacifiCare

also provided United with a copy of its standard “any

willing provider” form contract.

An actuary employed by a United affiliate met with

PacifiCare representatives in early July 2005 to discuss the

potential financial risks associated with Part D. At the

meeting, PacifiCare disclosed its projected national

average bids for its Part D plans. The actuary in turn

provided, in a sealed envelope that was addressed to a

PacifiCare executive who was not present, corresponding

information concerning United’s projected Part D plans.

Following the meeting, the actuary prepared a writ-

ten summary of the actuarial risks associated with

PacifiCare’s projected Part D strategy and then disquali-

fied himself from further Part D involvement. United’s

No. 09-1152 7

board approved the acquisition in short order after

being briefed on the actuary’s summary, and PacifiCare

and United executed a formal merger agreement on

July 6, 2005. The merger agreement included a provision

barring PacifiCare from entering contracts under which

it would incur liabilities of more than $3 million prior

to the consummation of the merger; a contemporaneous

“company disclosure letter” also in the record (and re-

ferred to in the merger agreement) explicitly exempted Part

D contracts from that prohibition.

After the merger agreement was signed, but before

the deal closed, United and PacifiCare discussed how

they might integrate their operations if the merger were

approved by the Department of Justice’s Antitrust Divi-

sion. (The merger was ultimately approved on Decem-

ber 20, 2005, after United and PacfiCare divested them-

selves of some overlapping holdings.) In Septem-

ber 2005, PacifiCare and United executives began colla-

borating on a memorandum (the “strategic options

memo” or “SOM”) entitled “United Health Group’s

Pharmacy Management Options.” The SOM outlined

various “strategic options” that the merged entities

could eventually take with regard to RxSolutions, Pacifi-

Care’s in-house PBM. One of the suggestions made in

the SOM was to use RxSolutions “as a stalking horse to

obtain the best service and contracts.” Several iterations

of the SOM were circulated among United and Pacifi-

Care executives from September 2005 until at least

January 2006. Although the “stalking horse” language

was present in all the drafts, it was used in connection

with different strategic options as the SOM evolved. The

8 No. 09-1152

very first circulated draft of the SOM was attached to

a lengthy e-mail in which a PacifiCare executive pro-

posed discussing unspecified “sensitive items voice to

voice” with a United executive.

United and PacifiCare’s internal communications were

not known to Omnicare at the time, but their merger was

widely publicized. See, e.g., Milt Freudenheim, United-

Health to Buy PacifiCare in Push into Medicare, N.Y. Times,

July 7, 2005, at C1; Vanessa Fuhrmans, Dennis K. Berman

& Rhonda Rundle, Two Health Plans Agree on a Deal for $8.1

Billion—UnitedHealth Adds Heft in California and Medicare

with move on PacifiCare, Wall St. J., July 7, 2005, at A1.

Indeed, when Omnicare “became concerned that

PacifiCare-insured patients in [long-term care facilities]

serviced exclusively by Omnicare would be unable to

obtain their medications after January 1, 2006” because

Omnicare and PacifiCare still lacked a contract, it

reached out to United, not PacifiCare. In mid-October,

Omnicare’s Senior Vice President of Professional Services

and Purchasing, Tim Bien, sent an e-mail to United, asking,

“When the deal closes, will PacifiCare be contracted

with Omnicare as a result of the acquisition?” Craig

Stephens, Vice President of Industry Relations and Net-

works at United, received the e-mail and forwarded

it to United’s in-house counsel, commenting, “Inter-

esting—should we assume PacifiCare has not agreed

with Omnicare?” Stephens also conferred with some

United executives, two of whom Omnicare alleges had

access to PacifiCare’s Part D pricing information and

contracting strategy, before sending Bien a reply e-mail

on October 31. The reply stated in its entirety, “Pacifi-

No. 09-1152 9

Care’s Part D offering for 2006 is a unique contract

with CMS. If and when the deal closes, PacifiCare will

follow their own Part D product strategy throughout the

2006 calendar year.” Bien forwarded this reply to

Omnicare’s CEO, adding, “PacifiCare will not be in-

cluded with the United Part D offering.”

Omnicare concluded from Stephens’s response that it

would need a separate contract with PacifiCare if it

wanted to serve PacifiCare’s Part D enrollees. It then

took the unusual step of approaching PacifiCare,

through its agent RxSolutions, to reopen negotiations

in November 2005. (Most other insurers who did not

initially contract with Omnicare later approached

Omnicare if they wanted to add Omnicare to their phar-

macy networks.) Omnicare asked PacifiCare for its best

offer. PacifiCare, whose pharmacy network had already

been approved by CMS, told Omnicare that its

negotiating position had not changed and responded by

sending Omnicare another copy of its “any willing pro-

vider” contract. Omnicare did not send PacifiCare its

own form contract, make a counteroffer, propose the

addition of any of its eighteen “Patient Protections,” or

otherwise seek to negotiate any contractual terms with

PacifiCare. Its CEO instead simply signed PacifiCare’s

“any willing provider” contract on December 6, 2005,

two weeks before the United-PacifiCare merger formally

closed. Under this contract, Omnicare’s reimburse-

ment rate was fixed at AWP-16% plus a relatively low

dispensing fee; this reimbursement rate was the lowest

rate Omnicare contracted for with any national

pharmacy but was higher than the rates it contracted

for with at least three small pharmacies.

10 No. 09-1152

Two days after Omnicare signed the PacifiCare

contract, United, at a scheduled meeting, finally informed

Omnicare of its concerns about the “Patient Protections”

contained in its contract. United—without the aid of

WHI—then reopened negotiations with Omnicare in an

attempt to get the “Patient Protections” excised from

the contract. The negotiations reached an impasse in

January 2006, several weeks after the United-PacifiCare

merger was complete. At that point, United’s Craig

Stephens e-mailed a PacifiCare employee, asking, “Quick

question— do you have a Part D network with Omnicare

for [institutional] pharmacy?” The PacifiCare employee

responded affirmatively, and the two met to discuss

the matter. After that discussion, Stephens e-mailed

United’s in-house counsel: “I learned . . . yesterday that

[PacifiCare] has a favorable agreement in place with

Omnicare. We need to understand if we can utilize the

agreement for our business—this may offer a different

approach we can take with Omnicare.”

The PacifiCare-Omnicare agreement contained a pro-

vision that allowed PBM RxSolutions to add new clients

to the agreement without obtaining consent from

Omnicare. It also lacked Omnicare’s “Patient Protections”

and included a far lower reimbursement rate than the

one United was presently required to pay Omnicare

under the WHI-negotiated contract. (It did, however,

include a provision that allowed Omnicare to terminate

the contract with or without cause upon 180 days’

written notice.) United informed Omnicare in late Feb-

ruary 2006 that, as a newly minted RxSolutions client,

it was going to join the PacifiCare-Omnicare contract,

effective April 1, 2006.

No. 09-1152 11

Omnicare was dissatisfied with this turn of events,

which would place more than one-third of its Part D

business under the governance of a pro-insurer contract.

It threatened United with legal action. United expressed

its desire to cultivate a “long-lasting relationship with

Omnicare” and agreed to provide Omnicare with a

higher reimbursement rate through April while the

parties tried to reach a contractual middle ground. Never-

theless, the parties’ negotiations over future reimburse-

ment rates and other contract terms quickly soured.

Omnicare followed through on its threat of legal action

by filing this suit in May 2006.

In its complaint, originally filed in the Eastern District

of Kentucky, where its corporate headquarters are

located, Omnicare alleged that United, PacifiCare, and

RxSolutions (collectively “Defendants”) violated the

Sherman Antitrust Act, 15 U.S.C. § 1, and a parallel state

statute, the Kentucky Consumer Protection Act, Ky.

Rev. Stat. Ann. § 367.175. Omnicare alleged that Defen-

dants formed a “buyers’ cartel” in which they shared

information and conspired to gain a competitive ad-

vantage over Omnicare, the seller of pharmaceutical

services. Omnicare also alleged that Defendants com-

mitted fraud, conspired to do so, and unjustly enriched

themselves at Omnicare’s expense by switching United

to PacifiCare’s more favorable contract. Defendants

successfully moved to transfer the action to the Northern

District of Illinois. (The contract United originally signed

with Omnicare provided that Illinois courts were to

have exclusive jurisdiction over disputes “arising under

or in connection with” it.) The transfer was treated as

12 No. 09-1152

change of venue under 28 U.S.C. § 1404(a), see Kerobo v.

Sw. Clean Fuels Corp., 285 F.3d 531, 535 (6th Cir. 2002),

and no party now contests its validity.

Once the case was relocated to the Northern District

of Illinois, Defendants moved to dismiss Omnicare’s

antitrust claims pursuant to Federal Rule of Civil Pro-

cedure 12(b)(6). The district court allowed the claims to

go forward, concluding that Omnicare had “pleaded facts

which plausibly suggest that the merger agreement

constituted a contract, combination, or conspiracy

between UnitedHealth and PacifiCare under section 1 of

the Sherman Act.” Omnicare, Inc. v. UnitedHealth Group,

Inc., 524 F. Supp. 2d 1031, 1039 (N.D. Ill. 2007). After

extensive discovery, Defendants moved for summary

judgment on all of Omnicare’s claims. Omnicare cross-

moved for partial summary judgment, arguing that De-

fendants’ five affirmative defenses failed as a matter

of law. The district court fully granted Defendants’

motion and denied Omnicare’s. Omnicare challenges

these outcomes.

II. Discussion

A. Sherman Act Claims

1. Overview & Standard of Review

Omnicare alleges that United and PacifiCare coordi-

nated their negotiations with Omnicare to avoid

Omnicare’s “Patient Protections” and depress the reim-

bursement rates they paid to Omnicare beneath the com-

petitive level. Their alleged agreement had its genesis in

No. 09-1152 13

their pre-merger due diligence, during which Omnicare

contends United learned competitively sensitive infor-

mation about PacifiCare’s Part D plans. United, armed

with the knowledge that PacifiCare’s anticipated Part D

reimbursement rates were significantly lower than its

own, allegedly agreed with PacifiCare that United

would enter into a contract with Omnicare while

PacifiCare played hardball, offering Omnicare only

its “any willing provider” contract that had a low reim-

bursement rate and lacked Omnicare’s “Patient

Protections.” Omnicare alleges that this plan unfolded

precisely as described in the strategic options memo;

PacifiCare acted as a “stalking horse,” while United lay

patiently in wait. When Omnicare inquired about

PacifiCare’s contracting plans some months later,

United seized its opportunity and provided Omnicare

with an intentionally misleading response that induced

Omnicare to sign PacifiCare’s “any willing provider”

contract without negotiation. Shortly thereafter, the

allegations continue, United completed its end of the

agreement by concocting pretextual reasons to exit

its contract with Omnicare and then joining PacifiCare’s.

Omnicare contends that these actions constitute a

buyers’ cartel that is per se violative of the Sherman Act.

It disputes the district court’s conclusion that it failed

to produce sufficient evidence to create a genuine issue

of material fact as to the existence of an anticompeti-

tive agreement between United and PacifiCare.

Omnicare also challenges the district court’s analytical

methods and evaluation of its evidence. It claims that the

district court evaluated its evidence in a piecemeal

14 No. 09-1152

rather than in the proper holistic fashion, see Kochert v.

Greater Lafayette Health Servs., Inc., 463 F.3d 710, 717

(7th Cir. 2006); In re High Fructose Corn Syrup Antitrust

Litig., 295 F.3d 651, 655-56 (7th Cir. 2002); ignored, dis-

counted, and failed to draw favorable inferences from

evidence it presented; usurped the role of the jury by

inappropriately weighing evidence; and drew inferences

in Defendants’ favor.

We find no merit in Omnicare’s claims that the

district court bungled its analysis in its thorough

opinion and order. Even on summary judgment,

district courts are not required to draw every requested

inference; they must only draw reasonable ones that

are supported by the record. See Omosegbon v. Wells,

335 F.3d 668, 677 (7th Cir. 2003). The district court’s

refusal to infer collusion from evidence put forth by

Omnicare is in accordance with this general principle,

and, importantly, does not amount to inappropriately

drawing inferences in favor of Defendants. District

courts are also not bound to discuss in detail every

single factual allegation put forth at the summary judg-

ment stage. Fresenius USA, Inc. v. Baxter Int’l Inc., 582

F.3d 1288, 1303 (Fed. Cir. 2009) (“[T]here is no require-

ment that the district court’s opinion discuss every

single fact alleged.”). Omnicare is correct that district

courts presiding over summary judgment proceedings

may not “weigh conflicting evidence,” High Fructose

Corn Syrup, 295 F.3d at 655, or make credibility deter-

minations, see Washington v. Haupert, 481 F.3d 543, 550

(7th Cir. 2007), both of which are the province of the

jury. But the district court here did not make credibility

No. 09-1152 15

determinations, and it did not inappropriately weigh

evidence. It instead scrutinized the evidence in what

was substantively a holistic fashion, adhering closely to

the governing law we outline below.

We review the district court’s grant of summary judg-

ment de novo. See, e.g., Tri-Gen Inc. v. Int’l Union of Oper-

ating Eng’rs, Local 150, 433 F.3d 1024, 1030 (7th Cir.

2006). In doing so, we construe all facts and reasonable

inferences in favor of the nonmoving party, id., and take

care not to weigh any conflicting evidence, McCann v.

Iroquois Mem. Hosp., 622 F.3d 745, 752 (7th Cir. 2010);

High Fructose Corn Syrup, 295 F.3d at 655 (describing

the weighing of evidence as a “trap” to avoid when

“deciding whether there is enough evidence of price

fixing to create a jury issue”). But Omnicare cannot

merely rest on its pleadings; it must affirmatively dem-

onstrate, by producing evidence that is more than

“merely colorable,” that there is a genuine issue for trial.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).

2. Governing Law

Section 1 of the Sherman Act (“§ 1”), 15 U.S.C. § 1,

is designed to prevent businesses from entering into

collusive agreements, and section 4 of the Clayton Act,

15 U.S.C. § 15, provides a private cause of action for the

enforcement of § 1. (Section 4 also provides treble dam-

ages and attorneys’ fees to successful antitrust plaintiffs.)

By its terms, § 1 prohibits “[e]very contract, combina-

tion . . . or conspiracy, in restraint of trade or commerce,”

15 U.S.C. § 1, though courts have long restricted its

16 No. 09-1152

reach to agreements that unreasonably restrain trade,

see State Oil Co. v. Khan, 522 U.S. 3, 10 (1997). Agreements

to fix prices unambiguously fall within the ambit of § 1.

United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 223

(1940).

Ordinarily, price-fixing agreements exist between

sellers who collude to set their prices above or below

prevailing market prices. But buyers may also violate

§ 1 by forming what is sometimes known as a “buyers’

cartel.” See Sanner v. Bd. of Trade of City of Chi., 62 F.3d

918, 927-28 (7th Cir. 1995) (conspiracy to depress

soybean prices, intended to benefit soybean buyers,

created cause of action in soybean sellers); Vogel v. Am.

Soc. of Appraisers, 744 F.2d 598, 601 (7th Cir. 1984) (“[B]uyer

cartels, the object of which is to force the prices that

suppliers charge the members of the cartel below the

competitive level, are illegal per se. Just as a sellers’

cartel enables the charging of monopoly prices, a buyers’

cartel enables the charging of monopsony prices; and

monopoly and monopsony are symmetrical distortions

of competition from an economic standpoint.” (citations

omitted)). That is what Omnicare alleges happened here.

To prevail under § 1 under any theory, plaintiffs gener-

ally must prove three things: (1) that defendants had

a contract, combination, or conspiracy (“an agreement”);

(2) that as a result, trade in the relevant market was

unreasonably restrained; and (3) that they were injured.

Denny’s Marina, Inc. v. Renfro Prods., Inc., 8 F.3d 1217,

1220 (7th Cir. 1993); cf. Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 585-86 (1986) (“To survive peti-

No. 09-1152 17

tioners’ motion for summary judgment, respondents

must establish that there is a genuine issue of material

fact as to whether petitioners entered into an illegal

conspiracy that caused respondents to suffer a cog-

nizable injury.”). Sometimes the second element is con-

clusively presumed once the first is proved; certain

types of trade-restraining agreements, such as horizontal

price-fixing ones like Omnicare alleges here, are con-

sidered per se unreasonable. See, e.g., Tri-Gen, 433

F.3d at 1032. Omnicare was unable to reap the benefit of

the presumption, however, because the district court

concluded that Omnicare’s case faltered at the first

stage. It granted Defendants’ motion for summary judg-

ment after finding that “Omnicare has failed to produce

evidence of action by UnitedHealth and PacifiCare that

is inconsistent with lawful conduct on the part of

two competing entities engaged in legitimate merger

discussions and planning.” Omnicare, Inc. v. UnitedHealth

Group, Inc., 594 F. Supp. 2d 945, 974 (N.D. Ill. 2009); see

also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (noting

that summary judgment must be entered “against a

party who fails to make a showing sufficient to establish

the existence of an element essential to that party’s case,

and on which that party will bear the burden of proof

at trial”).

To show concerted action, antitrust plaintiffs must

produce evidence that would allow a jury to infer that

the alleged conspirators “had a conscious commitment

to a common scheme designed to achieve an unlawful

objective.” Monsanto Co. v. Spray-Rite Serv. Corp., 465

U.S. 752, 764 (1984). That is, the circumstances of the

18 No. 09-1152

case must reveal “a unity of purpose or a common

design and understanding, or a meeting of minds in an

unlawful arrangement.” Am. Tobacco Co. v. United States,

328 U.S. 781, 810 (1946). Two separate economic

decisionmakers must be joined, “depriv[ing] the market-

place of independent centers of decisionmaking and

therefore of a diversity of entrepreneurial interests.” Am.

Needle, Inc. v. Nat’l Football League, 130 S. Ct. 2201, 2212

(2010) (quotation and citation omitted); see also Copper-

weld Corp. v. Independence Tube Corp., 467 U.S. 752, 769

(1984) (noting that in an anticompetitive agreement,

“two or more entities that previously pursued their own

interests separately . . . combin[e] to act as one for

their common benefit” in the restraint of trade); cf.

Kartell v. Blue Shield of Mass., Inc., 749 F.2d 922, 930 (1st

Cir. 1984) (Breyer, J.) (“Competitors cannot agree, for

example, to insist that their contracts . . . contain arbitra-

tion clauses, even though each individual competitor

can make up his own mind to insist upon such a term

in any, or all, of his contracts.”). Essentially, Omnicare

must demonstrate that there is a genuine issue of

material fact as to whether PacifiCare’s decision to

insist upon its “any willing provider” contract in its

negotiations with Omnicare was made not by PacifiCare

alone but rather by PacifiCare acting in concert with

United while the two were horizontal competitors.

Omnicare’s task—and ours—would be much easier if

there were a smoking gun buried in the voluminous

record. See High Fructose Corn Syrup, 295 F.3d at 654 (“[A]n

admission by the defendants that they agreed to fix

their prices is all the proof a plaintiff needs.”); see also

No. 09-1152 19

In re Baby Food Antitrust Litig., 166 F.3d 112, 118 (3d Cir.

1999) (“[W]ith direct evidence the fact finder is not re-

quired to make inferences to establish facts.” (quotation

omitted)). But Omnicare’s case, like most in this vein,

is “constructed out of a tissue of [ambiguous] statements

and other circumstantial evidence.” High Fructose Corn

Syrup, 295 F.3d at 662. It therefore must present evi-

dence from which we can infer that United and Pacifi-

Care had an anticompetitive agreement. Id. at 654. That

is, Omnicare “must show that the inference of conspiracy

is reasonable in light of the competing inferences of

independent action or collusive action that could not

have harmed” it. Matsushita, 475 U.S. at 588; see also Bell

Atl. Corp. v. Twombly, 550 U.S. 544, 554 (2007) (“[A]t

the summary judgment stage a § 1 plaintiff’s offer of

conspiracy evidence must tend to rule out the pos-

sibility that the defendants were acting independently.”);

Miles Distribs., Inc. v. Specialty Constr. Brands, Inc., 476

F.3d 442, 449 (7th Cir. 2007) (“When a plaintiff attempts

to defeat summary judgment by highlighting circum-

stantial evidence of a conspiracy, some of the evidence

must tend to exclude the possibility that the alleged

conspirators acted independently rather than in con-

cert.”). This does not mean that Omnicare must over-

come a heightened burden to defeat summary judgment,

see Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S.

451, 468 (1992); it simply means that “conduct as con-

sistent with permissible competition as with illegal con-

spiracy does not, standing alone, support an inference

of antitrust conspiracy,” Matsushita, 475 U.S. at 588.

20 No. 09-1152

Omnicare has produced an extraordinary amount of

evidence that in its view carries it over this threshold.

But the mere production of evidence, even, as

Defendants allege and we have no reason to doubt after

poring through the dozen boxes constituting the ap-

pellate record in this case, millions of pages of docu-

ments and nearly sixty depositions, provides insufficient

grounds for us to reverse a grant of summary judg-

ment. Instead, we must determine whether summary

judgment is appropriate using the two-part inquiry we

set forth in Market Force Inc. v. Wauwatosa Realty Co., 906

F.2d 1167, 1171 (7th Cir. 1990); see also Serfecz v. Jewel

Food Stores, 67 F.3d 591, 599 (7th Cir. 1995); Res. Supply

Corp. v. Owens-Corning Fiberglas Corp., 971 F.2d 37, 49

(7th Cir. 1992). Under that framework, we first assess

whether Omnicare’s evidence of agreement is ambigu-

ous—that is, whether it is equally consistent with the

Defendants’ permissible independent interests as it is

with improper activity. Market Force, 906 F.2d at 1171.

If we conclude that the evidence could support the con-

clusion that Defendants were acting independently, we

then look for any evidence that tends to exclude the

possibility that Defendants were pursuing independent

interests. Id. In other words, Omnicare must “show that

the inference of conspiracy is reasonable in light of

the competing inference of independent action.” Valley

Liquors, Inc. v. Renfield Imps., Ltd., 822 F.2d 656, 660-61

(7th Cir. 1987); see also Matsushita, 475 U.S. at 597 n.21

(“[C]onduct that is as consistent with permissible com-

petition as with illegal conspiracy does not, without

more, support even an inference of conspiracy.”).

No. 09-1152 21

3. Evidence of Agreement

Omnicare’s theory is that United and PacifiCare con-

spired to coordinate their negotiation strategies,

thereby reducing the price they paid Omnicare for its

institutional pharmacy services. Thus, to survive summary

judgment on the first prong of the Denny’s Marina test,

Omnicare must show that it has produced evidence

that, when considered collectively, would permit a rea-

sonable jury to conclude that United and PacifiCare

agreed to work together to fix prices. We discuss its

proffered evidence below.

a. The Strategic Options Memo &

Accompanying E-mail

Because Omnicare claims that the strategic options

memo (SOM) served as a “blueprint for the collusion,”

Appellant’s Br. 41, we begin there. On September 1,

2005—about three months after United and Pacifi-

Care’s first alleged illicit information exchange, about

two months after the formal merger agreement

was signed, and about a month after United inked

its contract with Omnicare—a PacifiCare executive sent

an e-mail to a United executive. In that e-mail, which

was by its terms “intended as an update” and referred

back to a past memorandum that is not part of the

record, the PacifiCare executive indicated that she had

spoken with a different United executive and was “in

agreement” that an unspecified “Part D readiness item . . .

can and should be done.” She also noted that she

would schedule a teleconference so the two could “discuss

22 No. 09-1152

more sensitive items voice to voice,” and attached “a

draft of a think piece on the PBM”—the first draft of the

SOM, which proposed, among other PBM strategies,

using RxSolutions “as a stalking horse to obtain the

best service and contracts.”

Omnicare asserts that the district court erred in failing

to “permit[ ] a jury to draw the inference that these dis-

cussions were collusive.” Appellant’s Br. 42. The

district court had before it, however, the entirety of the

e-mail and accompanying memo, as do we, and as

would the jury. When viewed in context, the statements

about “agreements” and “sensitive items” are decidedly

ambiguous. The “agreement” about “Part D readiness”

appears only to have resulted in the scheduling of a

meeting between the due diligence teams to further

discuss risk management. And the unspecified “sensitive

items” could, as Defendants posit, just as easily be

related to legitimate business matters such as personnel

concerns as they could be to an illicit agreement. See

Market Force, 906 F.2d at 1173 (considering defendants’

legitimate business explanations for the alleged collusive

conduct). At best, reasonable jurors could find that the

statements contained in the e-mail are ambiguous evi-

dence of vaguely directed joint conduct. See id. (“[I]t is

well established that evidence of informal communica-

tions among several parties does not unambiguously

support an inference of a conspiracy.”).

The strategic options memo, despite its use of the

loaded “stalking horse” phrase, is equally ambiguous

evidence of the existence of a price-fixing, negotiation-

No. 09-1152 23

coordinating agreement between United and PacifiCare.

Unquestionably, the SOM shows that United and

PacifiCare were communicating about their future plans.

It likewise shows that some of their discussions may

have concerned RxSolutions and a potential plan to use

it “to obtain the best service and contracts.” Yet Omnicare

has not demonstrated how these two features of the

SOM, even when considered with all its other evidence,

could lead a reasonable jury to infer a price-fixing con-

spiracy directed at Omnicare. Given the document’s

prospective language—all versions of the SOM invariably

discuss options that “need to be considered,” not

options that are actively being (or have been) pursued—

a reasonable jury would be hard-pressed to conclude

that the SOM was drafted to guide PacifiCare’s late-

2005 dealings with Omnicare. Moreover, the record

indicates that the SOM continued to be circulated, and

even distributed at meetings, well after the Part D

contracts were inked and the merger was finalized; the

undisputed chronology of the SOM’s distribution under-

cuts Omnicare’s assertion that it was a “blueprint” for

conspiracy, particularly where it was not circulated

until well after the plan as Omnicare envisions it

would have had to have been underway. Cf. In re Brand

Name Prescription Drugs Antitrust Litig., 288 F.3d 1028,

1034 (7th Cir. 2002) (noting that drawing an inference

of knowledge would be “shaky” where the alleged con-

spiratorial system was adopted before the alleged collu-

sion began). The SOM’s usefulness as a blueprint—and

the reasonableness of any inference in that direc-

tion—is further called into question by its shifting place-

ment of the “stalking horse” language.

24 No. 09-1152

b. Pre-Merger Information Exchange

Notwithstanding its contention that the SOM was the

cornerstone of the conspiracy, Omnicare alleges that

United and PacifiCare began coordinating their negotia-

tion strategies when they improperly exchanged Part D

pricing information during the period of due diligence

preceding their merger.2 Information exchange can

help support an inference of a price-fixing agree-

ment, Todd v. Exxon Corp., 275 F.3d 191, 198 (2d Cir.

2001) (Sotomayor, J.), but, like all circumstantial evidence

2

Omnicare asserts that the district court erred by not consider-

ing this contention as a stand-alone Sherman Act claim. See

Appellant’s Br. 47-50; Todd v. Exxon Corp., 275 F.3d 191, 198-99

(2d Cir. 2001) (Sotomayor, J.) (discussing information ex-

change as an “analytically distinct” type of claim based on the

Sherman Act). Yet Omnicare did not allege a distinct “informa-

tion exchange” claim in its amended complaint, see First Suppl.

& Am. Compl. ¶¶ 69-78; Burks v. Wis. Dep’t of Transp., 464

F.3d 744, 758 n.15 (7th Cir. 2006); Grayson v. O’Neill, 308 F.3d

808, 817 (7th Cir. 2002) (“[A] plaintiff may not amend his

complaint through arguments in his brief in opposition to a

motion for summary judgment.”), and, perhaps more impor-

tantly, it did allege an agreement to fix prices, not merely an

exchange of information, see Todd, 275 F.3d at 199. In any event,

the district court devoted roughly six pages of its opinion to

“Premerger Communications and Information Exchange” and

“Communications Subsequent to Execution of Merger Agree-

ment.” See Omnicare, 594 F. Supp. 2d at 968-74. We have no

doubt that the court considered this facet of Omnicare’s

claim, even if it failed to do so as explicitly as Omnicare

would have liked.

No. 09-1152 25

of conspiracy, it is not on its own demonstrative of

anticompetitive behavior, even when pricing data is

what is exchanged, see Mitchael v. Intracorp, Inc., 179

F.3d 847, 859 (10th Cir. 1999) (citing Baby Food, 166 F.3d

at 118; City of Long Beach v. Standard Oil Co., 872 F.2d

1401, 1406 (9th Cir. 1989) (noting that competitors may

exchange price information for legitimate business rea-

sons); cf. Todd, 275 F.3d at 199 (applying the rule of

reason to analyze Todd’s information exchange claim).

Omnicare argues that the exchanges here amount

to something sinister, particularly because United

may have breached its confidentiality agreements. See

Omnicare, 594 F. Supp. 2d at 969-71. In support of its

contentions, Omnicare points to several specific infor-

mation exchanges: “Part D Questions” that Pacifi-

Care answered at United’s request in June 2005; a “Due

Diligence Summary,” including a table of Part D bid

comparisons, prepared sometime between June 28

and July 2, 2005; a Part D risk assessment created by a

United-affiliated actuary after he met with four Pacifi-

Care representatives on July 2, 2005; some average

pricing information about United’s Part D plans that the

actuary delivered, in a sealed envelope, to a PacifiCare

representative not present at the meeting; and deposition

testimony regarding a conversation about the mutual

difficulties United and PacifiCare were experiencing in

their negotiations with Omnicare.3

3

We note that many of these documents are under seal. We

therefore discuss them using general, descriptive terms where

(continued...)

26 No. 09-1152

We agree with the district court that the nature of

Omnicare’s information-exchange contentions requires

us to walk a fine line:

On the one hand, courts should not allow plaintiffs

to pursue Sherman Act claims merely because con-

versations concerning business took place between

competitors during merger talks; such a standard

could chill business activity by companies that

would merge but for a concern over potential litiga-

tion. On the other hand, the mere possibility of a

merger cannot permit business rivals to freely ex-

change competitively sensitive information. This

standard could lead to “sham” merger negotiations,

or at least allow for periods of cartel behavior when,

as here, there is a substantial period of time between

the signing of the merger agreement and the closing

of the deal.

Omnicare, 594 F. Supp. 2d at 968. Looking at the pricing

information that was exchanged, however, we cannot

see how a reasonable jury could conclude that it is

more consistent with action on the conspiratorial side of

the line than with action on the innocuous due diligence

side. PacifiCare answered the “Part D Questions” in

general terms, and sometimes disclosed less informa-

tion than was requested because that was “what

3

(...continued)

possible, excerpting only information that does not appear to

be particularly sensitive. We do the same as the need arises

elsewhere.

No. 09-1152 27

the attorneys permitted.” The Due Diligence Sum-

mary—which discusses information gathered in the

final month preceding the merger agreement—provides

more detailed information, but it too is restricted to

“sample regions,” “high level review,” and “estimates.”

Even the Summary’s comparison of PacifiCare’s and

United’s pricing and benefits is restricted to general

terms—“consistent,” “higher,” “roughly,” and the like.

The purpose of the meeting the actuary attended

and summarized was to determine the impact of

PacifiCare’s Part D offerings on United’s valuation of

the company for merger purposes. Not only is accurate

valuation a critical component of the merger process,

but, like the other pricing information, the valuation

information was shared among a small number of execu-

tives on the eve of the merger agreement. Moreover,

there is no evidence that the actuary relayed the infor-

mation gleaned from the meeting directly to any

United executives, let alone those who were not cleared

to receive it. The record instead shows that he sent the

report first to PacifiCare’s outside counsel, who re-

viewed it and excised what he believed to be “competi-

tively sensitive” details before sending it along to

United’s outside counsel, who in turn reviewed it

before sending it to a handful of United executives.

Even more notably, the individual Omnicare identifies

as the overseer of United’s Part D-related pharmaceutical

contracting was not included among the report’s recipi-

ents.

The report itself recognizes that its ability to assess

risk is limited “without knowing the specific regions

28 No. 09-1152

or [PacifiCare’s] estimate of results by region” and

delivers its conclusions in general terms. For instance, it

merely notes that PacifiCare “appears to have appropri-

ately priced the benefit differences” without divulging

the nature of the benefits or their prices, and similarly

opines that PacifiCare has in some instances “taken

a conservative approach” without providing the

specific bases for that conclusion. E-mails circulated

contemporaneously among the United executives who

received the report place a further damper on a jury’s

ability to infer long-planned concerted action between

United and PacifiCare. In particular, one of United’s

Part D financial executives noted that one factor con-

tributing to his increasing comfort with PacifiCare’s

Part D plans was that “in year 2, we can move them

to our contracts”—the complete opposite of the collusive

outcome toward which United and PacifiCare were

allegedly working.

The conversation between a United executive and a

PacifiCare executive did not involve price but rather

concerned the parties’ mutual difficulties reaching

timely contracts with Omnicare. (Recall that United

did not sign its contract with Omnicare until late

July 2005, and pharmacy network proposals were due

to CMS on August 1.) The extent of the evidence of the

conversation is six lines of a United executive’s deposi-

tion, wherein he stated, “I do recall a conversation with

Jaqueline Kosecoff in the context of difficulties that

we were having reaching a timely contract with—

with Omnicare, and I believe that she told me that

[PacifiCare] was also having difficulties reaching an

No. 09-1152 29

agreement with the contract.” Phanstiel Dep. 93:22-94:2,

Feb. 5, 2008. No reasonable jury could conclude that the

conversation—which is mentioned only once in the

record—gives rise to an inference of illicit agreement. The

mere mention of contracting difficulty in the course of a

merger and development of new Part D plans does

not indicate the existence of a conspiracy to fix prices,

nor does it indicate coordination of any pricing, con-

tracting, or negotiation strategy whatsoever. Moreover,

it would have had to have taken place sometime

before United signed its contract with Omnicare,

which was at least a month before the SOM outlining

the alleged plan of attack was drafted.

Viewed separately and collectively, Omnicare’s evi-

dence of information exchange would not enable rea-

sonable jurors to infer that United and PacifiCare inap-

propriately shared information damaging to competi-

tion in and of itself (Omnicare’s alleged standalone

claim), nor that the information exchanged facilitated

the development or advancement of a coordinated negoti-

ating and pricing strategy. It similarly does not tend to

exclude the possibility that United and PacifiCare were

acting to advance their own legitimate interests. It

may illuminate other evidence, however, so we keep it

in mind as we work toward completing the evidentiary

picture.

c. Merger Agreement & Carve-Out

United and PacifiCare executed their formal merger

agreement on July 6, 2005. Section 5.01 of the agreement

30 No. 09-1152

prohibited PacifiCare from incurring any contract

liability of $3 million or more before the consummation

of the merger without United’s written approval. Sec-

tion 5.01 would thus on its face effectively prevent

PacifiCare from entering into any Part D agreements

without United’s review and approval. But section 5.01

also created an exception to its blanket prohibition: a

“company disclosure letter,” referred to by the parties as

the “carve-out.” The carve-out provided that Pacifi-

Care (and its subsidiaries, including PBM RxSolutions)

“may enter into or amend any Contracts relating to

their Part D standalone business that are variable cost or

based on sales production” without permission from

United. Omnicare contends that the carve-out was a

consequence of the illicit information exchange that

occurred during the Defendants’ due diligence. See

Part II.A.3.b, supra. It also presents an expert opinion

that the proper inference to be drawn from the existence

of the carve-out is that “United had become com-

fortable with PacifiCare’s Part D contracting strategy

based upon the confidential information it had obtained.”

Omnicare directs our attention to testimony from a

United Rule 30(b)(6) witness, who stated that United

agreed to the carve-out because it had reviewed

PacifiCare’s pricing information. That testimony could

support the reasonable inference that PacifiCare and

United were cooperating illicitly. But it must be con-

sidered not only in light of the information exchanged,

which was not on its face improper, but also in light of

the remainder of the witness’s testimony, wherein

he stated, in the very same sentence, that United re-

No. 09-1152 31

viewed the information only at a “very high level” of

generality. He further explained that United and Pacifi-

Care recognized the impropriety of sharing “specific

Part D information with each other . . . between signing

and close.” If jurors were to find that witness credible,

his uncontested statements about the scope of United’s

review, as well as the evidence of the information

United actually received, would limit their ability to

draw an inference of collusion from the mere existence

of the carve-out.

The inference advocated by Omnicares expert is a

reasonable one jurors could make. It is supported both

by the context of the merger regardless of the level

of detail of the information United received, it received

it in confidence during due diligence and by the testi-

mony of the Rule 30(b)(6) witness. The problem for

Omnicare is that jurors would have to draw additional

inferences from the expert’s suggested inference to con-

clude that the carve-out was demonstrative of an agree-

ment related not to the merger but rather to Part D negoti-

ating and contracting strategy. Such inferences might

be reasonable; after all, the carve-out specifically

addresses Part D. There is countervailing evidence,

namely that the carve-out by its terms excuses PacifiCare

from involving United in its Part D plans, but weighing

evidence is a task for the jury, not for this court.

We are tasked, however, with considering Defendants’

assertions that the carve-out was as compatible with

their legitimate business activity as it is with Omnicare’s

theory. Market Force, 906 F.2d at 1171. Here, Defendants

32 No. 09-1152

point to the Rule 30(b)(6) witness’s testimony, which

they assert demonstrates United’s recognition that “it

was clearly inappropriate to share specific Part D infor-

mation with each other between signing and close.” This

recognition, they contend, leads to an inference that the

carve-out operated to ensure the independence of the

parties’ Part D dealings. This inference is grounded in

the record; reasonable jurors could find it as persuasive

as Omnicare’s contentions that the carve-out proved

just the opposite. We are therefore confronted with an

ambiguity that can be resolved in Omnicare’s favor only

if it produces some evidence that tends to exclude the

possibility that United and PacifiCare were pursuing

independent interests. See id. at 1173. Because we con-

sider Omnicare’s evidence holistically, the absence of a

specific piece of exclusionary evidence at this juncture

does not necessarily undermine Omnicare’s case.

d. PacifiCare’s Negotiating Tactics

Negotiations between Omnicare and RxSolutions

(on behalf of PacifiCare) started off well enough in spring

2005, with a cordial exchange of e-mails and telephone

calls that eventually resulted in an exchange of form

contracts. A few friendly but firm e-mails followed, in

which each expressed a preference for its own form

contract. RxSolutions explained that PacifiCare expected

to enter into agreements with nearly 2000 pharmacies

and therefore could not take the time to modify Omni-

care’s proposed contract to its liking. Omnicare acknowl-

edged PacifiCare’s concerns but nonetheless urged

No. 09-1152 33

PacifiCare to look over its contract and inform Omnicare

of its most salient objections to provide a starting

point for negotiations. The record contains a document in-

dicating that RxSolutions and PacifiCare may have

made at least some effort to comply with Omnicare’s

request, but Omnicare claims that it first received this

document during discovery, and we draw the inference

in Omnicare’s favor. E.g., Miles, 476 F.3d at 448. At any

rate, by July 6, the day of PacifiCare’s merger with

United, negotiations between Omnicare and RxSolutions

had deteriorated significantly. Omnicare’s negotiations

log indicates that the parties were “[w]ay off on price” and

had a phone call that did not go well. Roughly one

week later, on July 14, RxSolutions informed Omnicare

that PacifiCare had decided to walk away from the

table. RxSolutions cited Omnicare’s proposed reimburse-

ment rate as the basis for PacifiCare’s exit from negotia-

tions. Omnicare did not propose a lower rate, but it

assured RxSolutions that it would “stand ready to negoti-

ate” if PacifiCare chose to do so.

PacifiCare instead submitted its Part D bid to CMS

without Omnicare in its network. CMS rejected the bid,

but gave PacifiCare a three-day window in which to

shore up its institutional pharmacy network. To do so,

PacifiCare reopened its negotiations with Managed

Health Care Associates, a large institutional pharmacy

that competes with Omnicare, and struck a deal to get

Managed Health Care Associates in its network.

PacifiCare promptly resubmitted its bid and received

CMS approval in September 2005.

34 No. 09-1152

On November 8, 2005, CMS issued a statement

regarding its “convenient access” standard. The state-

ment encouraged Part D plan sponsors to contract with

long-term-care pharmacies to ensure that their plan

members residing in institutional facilities could easily

access their necessary medications. The statement

also informed pharmacies that it was “imperative” for

them to “not withhold contracts” to similarly foster

access for the most fragile Part D participants, and it

emphasized at least twice that the contracting process

should be “ongoing” and could continue “before and after

the benefit begins on January 1, 2006.” Shortly after

this statement was issued, and two weeks after it

received an e-mail from United regarding PacifiCare’s

future Part D plans, see infra Part II.A.3.e, Omnicare

contacted RxSolutions to reopen negotiations with

PacifiCare. PacifiCare responded by offering Omnicare

the same “any willing provider” contract Omnicare

had previously rejected. This time, however, Omnicare

did not ask PacifiCare to look at its own form contract or

to consider an alternative reimbursement structure or

other contractual provisions. It instead informed Pacifi-

Care on December 5 that it was “prepared to sign”

PacifiCare’s “any willing provider” contract and did so

the next day.

Omnicare contends that this sequence of events only

makes sense if PacifiCare was coordinating its negotia-

tions strategy with United. It points to PacifiCare’s

“abrupt” termination of negotiations in July and its lack

of a contingency plan to provide medication to its Part D

enrollees residing in Omnicare-serviced facilities as

No. 09-1152 35

evidence of PacifiCare’s irrational behavior. It also

points to expert testimony that PacifiCare should

have been more risk averse in the face of an impending

acquisition that would net it $1.2 billion in market capital-

ization, and in light of the possibility that CMS could

revoke its Part D contract if it could not provide medica-

tion to its enrollees. Omnicare also claims that Pacifi-

Care was the only Part D plan that steadfastly refused

to negotiate with it, particularly after CMS assigned

plans their Medicaid-eligible participants.

Validating Omnicare’s contentions would require

reasonable jurors to draw inferences beyond those

possible even within the pro-nonmovant confines of

summary judgment. First, Omnicare’s characterization

of PacifiCare’s withdrawal from negotiations as “abrupt”

is a stretch in light of the evidence detailing the parties’

negotiations process. Omnicare’s own log of its negotia-

tions with PacifiCare reveals that fissures began

emerging in the parties’ relationship shortly after they

exchanged form contracts. The log notes that a phone

conversation the week prior to PacifiCare’s withdrawal

“did not go well” because the parties were “[w]ay off on

price.” It also reveals that Omnicare was aware that

PacifiCare was “talking to [Omnicare’s] competitors” from

the time of the parties’ very first conference call in early

April 2005. Perhaps PacifiCare’s decision to end negotia-

tions nonetheless came as a surprise to Omnicare, but

the record does not support the inference that it was

irrational and therefore entered at the behest of United.

Second, Omnicare relies on PacifiCare’s failure to

craft a “contingency plan” as evidence that United was

36 No. 09-1152

acting covertly as its safety net. Yet the November state-

ment from CMS made clear that the contracting phase

of the Part D launch could, and likely should, continue

past the formal launch date of January 1, 2006. No evi-

dence supports the conclusion that CMS required Part D

plans to develop contingency plans if they were unable

to enter into satisfactory contracts with every pharmacy

with which they engaged in negotiations.

Omnicare did introduce evidence showing that

many long-term care facilities enter into exclusive con-

tracts with institutional pharmacies, and that it is costly

for the facilities to switch or add providers. It argues

that PacifiCare must have known, given Omnicare’s

substantial market share, that some of its randomly

assigned Part D participants would reside in Omnicare-

contracted facilities; it was therefore irrational for

PacifiCare not to contract with Omnicare unless Pacifi-

Care was acting in concert with United. This argument

has some persuasive force, though it ignores record

evidence from CMS explaining that the Part D convenient

access standards were designed to “promote competi-

tion” and “give each facility access to a broader range of

potential [long-term care] pharmacies than is the case

today.” In light of the statements from CMS, both about

increased competition and continued contracting, and

against the uncertain landscape of a completely new

program, PacifiCare’s behavior would not necessarily

be contrary to its economic interest and thus exclusive of

independent conduct. Indeed, PacifiCare succeeded in

securing CMS approval of its Part D pharmacy network

without Omnicare, and the record shows that it was not

No. 09-1152 37

the only Part D plan sponsor that was able to get

approval under such conditions.

To rebut this evidence tending to show that PacifiCare

acted rationally and independently, see Market Force, 906

F.2d at 1173, Omnicare asserts that PacifiCare’s behavior

was particularly suspect in two crucial respects. First,

Omnicare contends that PacifiCare was the only large

Part D plan sponsor that did not take the initiative to

reopen negotiations with Omnicare after receiving its

list of randomly assigned Medicaid-eligible enrollees.

Second, it argues that because PacifiCare was in the

midst of being acquired, it should have been particularly

risk-averse so as to ensure the consummation of the

merger.

The first contention is not supported by the record.

Omnicare points to a single e-mail from Humana, a

large insurer and Part D plan sponsor, in which

Humana expressed its post-CMS-approval willingness to

reach an agreement with Omnicare. We must infer that

this e-mail, which is presented in isolation, was a sua

sponte undertaking on the part of Humana. But Omni-

care produces no other evidence showing that

other insurers in fact took the first steps toward post-

approval negotiations. Perhaps Humana’s overtures, and

not PacifiCare’s lack thereof, were the aberration; we

cannot tell from the record, and we therefore cannot

conclude that the Humana e-mail tends to exclude

the possibility that PacifiCare was acting in its own

independent interest.

Support for the second contention is somewhat more

salient. Omnicare has submitted an expert report from

38 No. 09-1152

Professor John Coates in which he opines that acquisi-

tion targets generally behave conservatively. In his

view, PacifiCare would not have pursued a “risky

strategy of offering Omnicare nothing but an

‘any willing provider’ contract” absent an agreement on

negotiation strategy with United. Appellant’s Br. 35.

Assuming that Coates’ report is admissible, cf. Brooke

Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S.

209, 242 (1993), it supports Omnicare’s theory of the

case. Yet its ultimate relevance hinges on the determina-

tion that what PacifiCare did was, in fact, risky. Omnicare

has produced evidence showing that Part D was critical

to the United-PacifiCare merger and that PacifiCare

stood to gain over $1 billion if the merger panned out.

This evidence supports the inference that PacifiCare’s

behavior, even if rational, was not without its share of

risk. Defendants, on the other hand, suggest that Pacifi-

Care executives were simply “anxious to impress their

new owners with their negotiating skills” and bar-

gained hard to achieve that end. Appellees’ Br. 31. In

light of these competing inferences, we ask whether

there is any evidence that tends to exclude the possi-

bility that PacifiCare was acting in accordance with its

independent aims. Market Force, 906 F.2d at 1171.

Here, Omnicare comes up short, at least with respect

to the issue of negotiation in isolation. Omnicare’s

theory is that PacifiCare acted the way it did because

it knew that if its strategy failed, it could join United’s

contract with Omnicare or at the very least that United

would not abandon the merger given its complicity.

But the contract governing United’s relationship with

No. 09-1152 39

Omnicare provided that no modifications could be made

to the list of contracted plans without Omnicare’s

written consent, which was to be awarded in Omnicare’s

sole discretion. Regardless of any conspiracy, Omnicare

had full power over which insurers could become

parties to the United contract. This renders the existence

of a fall-back plan between United and PacifiCare es-

sentially useless; the parties “ ‘must make a substantial

investment with no assurance that it will pay off.’ ”

Matsushita, 475 U.S. at 588 (quoting Frank H. Easterbrook,

Predatory Strategies and Counterstrategies, 48 U. Chi. L. Rev.

263, 268 (1981)). We thus find it difficult to conclude

that inferring anticompetitive agreement from Pacifi-

Care’s negotiation tactics, though perhaps reasonable, is

as reasonable as inferring it acted independently. See

Matsushita, 475 U.S. at 588. Again, however, we will

reevaluate the import of PacifiCare’s hard-line bar-

gaining as part of our holistic assessment of the evi-

dence. See infra Part II.A.3.h.

e. The October E-mails

In mid-October 2005, Omnicare’s Tim Bien became

concerned that PacifiCare Part D enrollees who resided

in Omnicare-serviced institutions would be unable to

get their medications once Part D went live because

PacifiCare had no agreement in place with Omnicare.

To determine if United intended to add PacifiCare en-

rollees to its pre-existing contract with Omnicare,

and thus put his concerns to rest, Bien sent an informal

e-mail to United’s Craig Stephens on October 17. That

40 No. 09-1152

e-mail read, “Craig, Is there a sense of when United

will close the acquisition of PacifiCare? When the deal

closes, will PacifiCare be contracted with Omnicare as

a result of the acquisition? Thanks for your help on this.

Tim Bien.” After a week passed with no response

from Stephens, Bien sent a follow-up e-mail in which

he reproduced the first e-mail and asked, “Can you

give me anything on this?” Before responding to Bien,

Stephens consulted with two of his superiors, both of

whom had learned some information about PacifiCare

during due diligence. He also forwarded the e-mail to

United’s in-house counsel, adding, “Interesting—should

we assume Pacificare has not agreed with Omnicare?” In-

house counsel’s response is not included in the record,

though in-house counsel recalled reviewing a draft of

Stephens’s response e-mail, which was sent to Bien on

October 31. In that e-mail, Stephens stated, “PacifiCare’s

Part D offering for 2008 is a unique contract with CMS.

If and when the deal closes, PacifiCare will follow their

own Part D product strategy throughout the 2006

calendar year.”

Bien forwarded this reply to Omnicare’s CEO, adding,

“PacifiCare will not be included with the United Part D

offering.” The CEO later stated at his deposition that

he took the e-mail to mean that PacifiCare “would be

an independent, freestanding, unique contract in 2006,

having nothing to do with United, and that on that basis

it would be all right for us to cover those few percent

of our patients in the PacifiCare plans through an [’any

willing provider’] agreement since they wouldn’t give

us anything else.” One week after Stephens sent his

No. 09-1152 41

reply e-mail, CMS issued a statement encouraging Part D

plans and pharmacies to continue their negotiations.

The week after that, Omnicare contacted PacifiCare to

reopen negotiations and received PacifiCare’s “any

willing provider” contract in return.

Omnicare identifies Stephens’s October 31 e-mail as

the primary catalyst for its future dealings with Pacifi-

Care. It contends that because the e-mail was drafted

after consultation with individuals who had access to

PacifiCare’s pricing data, and was sent “with knowledge

that Omnicare was deciding whether to seek a separate

contract with PacifiCare,” Appellant’s Br. 39, it supports

an inference “that United wanted to deceive Omnicare

into entering an ‘any willing provider’ contract with

PacifiCare,” id. at 40. Indeed, Omnicare asserts that

Bien’s inquiry gave United the opportunity to set its

collusive plan with PacifiCare in motion.

Omnicare’s suggested inferences may be a bit of a

stretch for reasonable jurors. Though United was able to

offer Omnicare an answer on PacifiCare’s behalf, there

is no evidence that the answer was based on any

improper information. See supra Part II.A.3.b (discussing

Omnicare’s evidence of pre-merger information ex-

change). Similarly, the record contains no evidence that

United consulted with PacifiCare about the response,

which would be expected if the two were working

together to elicit action from Omnicare. There is also

no evidence indicating whether or how United knew

Omnicare’s motivation for sending the e-mail; it is not

clear how United would know what Omnicare’s negotia-

42 No. 09-1152

tions plans were, or could predict the extent to which a

two-line e-mail might influence the sophisticated com-

pany’s behavior. Even if we assume, generously, that

Omnicare reopened negotiations with PacifiCare on

the basis of this e-mail, it’s not clear how United could

have reasonably expected, or even intended, the e-mail

to dictate Omnicare’s subsequent decision to contract

with PacifiCare without negotiation.

The e-mails therefore do little to demonstrate that

United and PacifiCare had any sort of agreement. They

are, however, consistent with independent action. Omni-

care unilaterally initiated the communications that

precipated the e-mail; PacifiCare had not been acting

like a “stalking horse,” seeking out a contract with

Omnicare. United responded to Omnicare’s e-mails

without consulting alleged partner PacifiCare. Moreover,

it responded to the question Omnicare asked, that is,

whether United planned to add PacifiCare onto its con-

tract. Though United did not respond immediately,

sending a response after consulting with a legal depart-

ment is well within the norms of independent behav-

ior. And United’s response was truthful: PacifiCare

did have its own contract with CMS, and the carve-out

to the merger agreement gave it free rein to conduct

its Part D negotiations independently. Nothing about

United’s response to Omnicare’s e-mails tends to ex-

clude independent action.

f. The Contract Rate

The penultimate step in the alleged conspiracy be-

tween United and PacifiCare was Omnicare’s signing of

No. 09-1152 43

PacifiCare “any willing provider” contract, which con-

tained a reimbursement rate below that which Omnicare

received in connection with most other Part D plans.

Omnicare contends that the rate is so far below that

which would be expected in a competitive market that

an inference that United and PacifiCare colluded to

generate it is reasonable on the basis of the rate alone.

In support of its contention, Omnicare points to a

report from its economics expert, Professor Daniel

Rubinfeld, which shows that the rate in the PacifiCare

contract was significantly lower than both the rates

Omnicare negotiated with other Part D plan sponsors

and the ones that PacifiCare negotiated with other phar-

macies. Omnicare also asserts that PacifiCare was the

only Part D plan to “demand from the largest institu-

tional pharmacy a sub-competitive rate on a non-

negotiable basis, a fact that tends to exclude indep-

endent action.” Appellant’s Br. 44. Omnicare also raises

a host of challenges to the district court’s handling of its

contention about the rate and the evidence it put forth

to support it; it claims that the district court usurped

the role of the jury; ignored evidence, including Profes-

sor Rubinfeld’s regression analysis; and overstated

the significance of PacifiCare’s CMS approval.

We proceed directly to Omnicare’s contention that

the district court substantively erred in its assessment of

the contract rate. (If the district court did misstep in

its treatment of the evidence, which we do not believe

it did, see supra Part II.A.1, our de novo review should

go far toward rectifying any errors.) The district court

concluded that the contract rate was largely the result

44 No. 09-1152

of Omnicare’s failure to engage PacifiCare in negotia-

tions. Indeed, Omnicare conceded at oral argument that

the alleged “stalking horse” strategy would have im-

ploded if it had simply declined to sign PacifiCare’s

“any willing provider” contract. “If the contract really

made no economic sense, as Omnicare now contends, one

would not have expected Omnicare to enter into that

contract so readily.” Omnicare, 594 F. Supp. 2d at 967. But

that is what Omnicare did, and we cannot ignore the

impact that a lack of negotiation had on the agreed-

upon rate. Professor Rubinfeld, whose regression analysis

Omnicare characterizes as supportive of its claim that

the rate should have been higher, specifically noted that

his analysis “assumed that the bargaining process be-

tween PacifiCare and Omnicare is similar to the bar-

gaining process between other [insurers] and Omnicare.”

Omnicare has not produced any evidence that any of

its other contracts, providing for rates within the fair

market norm, were signed without negotiation. To the

contrary, it notes that other large Part D plan sponsors

with whom it signed contracts late in the game “agreed to”

rates in line with what Omnicare generally expected,

indicating that at least some back-and-forth occurred.

Appellant’s Br. 45 (emphasis added).

Omnicare has produced some evidence from which

reasonable jurors could infer that PacifiCare rebuffed

its good-faith negotiating efforts, including PacifiCare’s

assertion that its “any willing provider” contract was

its “best offer,” and deposition testimony from a Pacifi-

Care employee stating that he would not have recom-

mended that PacifiCare go back to Omnicare if it refused

No. 09-1152 45

the “any willing provider” contract. Yet, as discussed

above, PacifiCare’s hard-line negotiating and attempts

to get the lowest rates possible were not inconsistent

with its independent economic interest and therefore

do not give rise to a material issue regarding the ex-

istence of a conspiracy. That is particularly true given

PacifiCare’s approval by CMS. Omnicare attempts to

minimize the significance of this fact (and indeed claims

that the district court overemphasized it), but Omnicare

characterizes the January 1, 2006, Part D launch date as

a hard-and-fast negotiating deadline after which ap-

proval would be immediately revoked if problems

arose. This characterization is belied by statements

from CMS that Omnicare itself placed in the record.

Omnicare also attempts to de-emphasize the existence

of other contracts it entered at similarly unfavorable

rates. Those contracts, made with a few small Part D

plans, indicate that the rate contained in PacifiCare’s

contract is not per se anticompetitive on its face. Omni-

care asserts that its “transactions costs in negotiating

with either of these two [insurers] would outweigh any

benefit gained through negotiating a competitive rate.”

Appellant’s Br. 47. The testimony from Omnciare’s CEO

indicates that it may have made a similar calculus

with PacifiCare, despite having full knowledge of Pacifi-

Care’s impending merger with United and presumable

awareness that the “any willing provider” contract gave

PacifiCare the ability to add parties at will. (Omnicare

conceded as much at oral argument, asserting, “It was a

rational economic decision to sign the PacifiCare con-

tract on PacifiCare’s terms” to “pick up additional reve-

46 No. 09-1152

nue” after it had contracted with “everyone else.”) The

mere fact that Omnicare opted not to negotiate

the rate provision in PacifiCare’s proffered contract

does not render it “non-negotiable” or “sub-competitive.”

Nor does it support an inference of collusion.

g. United’s Behavior Toward Omnicare

United executed its WHI-negotiated contract with

Omnicare in late July 2005. According to Omnicare,

United began trying to exit the contract after (inappro-

priately) learning in due diligence that PacifiCare

planned to get Omnicare to sign its “any willing provider”

contract. To that end, United concocted some pretextual

legal concerns about Omnicare’s “Patient Protections,”

which may have actually been “business concerns,” and

withheld those concerns from Omnicare until it con-

tracted with PacifiCare in December 2005. United also

instructed WHI, its PBM and negotiator of the contract,

to remain tight-lipped about its contractual concerns.

Mere days after the PacifiCare-Omnicare contract was

in place, United voiced its concerns to Omnicare. It

then abandoned its contract in favor of PacifiCare’s two

months later. Omnicare points to the “suspicious timing”

of all these events as indicative of collusion.

For its part, United contends that its concerns about

the “Patient Protections”—namely, that they were viola-

tive of Medicare Part D regulations—were genuine,

arose earlier, and were shared by other Part D plan spon-

sors. (Omnicare concedes the latter point.) It also main-

tains that it did not know about PacifiCare’s contract

No. 09-1152 47

when it brought its concerns to Omnicare’s attention,

and the record shows that it attempted to allay its con-

cerns and preserve its relationship with Omnicare by

trying to renegotiate its own contract. United offers no

explanation for the timing of its initial discussion with

Omnicare, or for instructing WHI not to contact Omnicare.

Both parties omit some important details from their

discussion of United’s behavior. Fortunately, the well-

developed record fills in many of the gaps. According

to documents in the record, United’s inside counsel was

exploring the possibility of having WHI renegotiate

its contract with Omnicare in early September 2005.

United also enlisted outside counsel to review the con-

tract at that time. Outside counsel provided United with

its opinion that the Patient Protections were suspect

two months later, on November 9, 2005. (Counsel at

WHI also independently concluded that there were

potential legal issues with the Patient Protections, at

least as they related to United.) United was unable to

personally approach Omnicare, however, until later

in November; its contract with WHI forbade it from

conducting its own negotiations without permission

from WHI, which was not orally granted until Novem-

ber 22, 2005. In early December, United specifically in-

structed WHI not to “discuss the details with Omni-

care until further notice;” it wanted “NO communication

to Omnicare that we will be removing ourselves from

the WHI contract.” United also told WHI, however, that

it “believe[d] Omnicare is looking for common ground

to implement” and had decided to “not be aggressive

on the call unless they shoot first.”

48 No. 09-1152

United and Omnicare reopened negotiations with

a phone conference on December 8, 2005. The record

indicates that the call was scheduled in advance, as

e-mails sent on December 7 mention it, but it is

unclear when the date was set. (If the call was planned

prior to December 6, it would significantly undermine

any inferences that could be drawn from the “suspicious

timing” of United’s behavior, because Omnicare would

have known United had contractual concerns prior to

signing PacifiCare’s contract on December 6.) Notes

from the call indicate that Omnicare was amenable to

renegotiating directly with United, though the record

shows that WHI proposed a revised agreement in late

December, in which the reimbursement rates paid to

Omnicare remained at their original levels but from

which the Patient Protections were excised. Notes from

the December 8 call also show that Omnicare mentioned

the possibility of adding PacifiCare to any renegotiated

United contract.

When Omnicare’s narrative is supplemented with

record evidence omitted from its original timeline, the

inference of “suspicious timing” becomes more difficult

for a reasonable jury to make. United was unable to

raise its concerns with Omnicare prior to November 22,

2005. And it raised its concerns before the merger had

been fully approved by the Department of Justice; if

talks with Omnicare went poorly and the merger fell

through, United would not have had any PacifiCare

contract option available to fall back on. There is no

evidence showing that either United or PacifiCare had

any influence over Omnicare’s decision whether—or

No. 09-1152 49

when—to sign PacifiCare’s “any willing provider” con-

tract. The December 8 conference call was scheduled at

least a day in advance, presumably at a mutually agree-

able time, and it resulted in efforts by United to revise

the contract. Only United’s instructions to WHI remain

arguably “suspicious.”

United’s behavior toward Omnicare cannot on the

whole be construed as indicative of its involvement in

an anticompetitive agreement with PacifiCare. United’s

stated concerns about the “Patient Protections” were

sufficiently prevalent that CMS later addressed them

in an “FAQ” format. Perhaps most tellingly, over the

course of a few months, United, occasionally with the

aid of WHI, worked toward a new contract with

Omnicare, though Omnicare rejected the revisions. If

United planned all along to abandon its contract to

join PacifiCare’s, it would be irrational for it to invest

significant time and resources into negotiating a new,

less favorable contract from which it only intended to

extricate itself. Outside of United’s strongly worded

instructions to WHI, which themselves tell us nothing

about United’s consortium with PacifiCare, there is

little about United’s behavior that excludes the possi-

bility that it was acting independently.

h. The Big Picture

The bulk of Omnicare’s evidence, when viewed

alone, does not satisfy the Market Force test. However, we

must look at it all together before closing the door on

Omnicare’s Sherman Act claim. See High Fructose Corn

50 No. 09-1152

Syrup, 295 F.3d at 655; supra Part II.A.1. To recap,

Omnicare’s theory is that United and PacifiCare col-

luded, before and during their 2005 merger, to depress

the prices they would pay for Omnicare’s pharmaceu-

tical services. The alleged conspiracy achieved its

ultimate goal in February 2006, when United switched

its Part D enrollees serviced by Omnicare to PacifiCare’s

much more favorable contract. Omnicare contends that

the design of the “evolving scheme,” Appellant’s Br. 23,

was set forth in the strategic options memo and was

furthered by continual exchanges of sensitive pricing

information. These exchanges of information formed

the backbone of the collusion. They resulted in a carve-

out to the United-PacifiCare merger agreement, permitted

both PacifiCare and United to behave irrationally

in their dealings with Omnicare, and even underlay

United’s inducement of Omnicare to sign PacifiCare’s

“any willing provider” contract, which it then joined.

Omnicare claims that the rate at which it is now reim-

bursed by both United and PacifiCare is far below what

it should be.

Omnicare’s richly detailed narrative is complex and

compelling. But Omnicare cannot get to trial based on the

elegance of its theory alone. To survive summary judg-

ment, it “must show that the inference of conspiracy

is reasonable in light of the competing inferences of

independent action or collusive action that could not

have harmed” it. Matsushita, 475 U.S. at 588. Not only

that, its “offer of conspiracy evidence must tend to rule

out the possibility that the defendants were acting inde-

pendently.” Bell Atl. Corp., 550 U.S. at 554. When consid-

No. 09-1152 51

ered alongside the competing inference of independent

action, the inference of conspiracy is the less reasonable

of the two. Likewise, the ample evidence offered by

Omnicare does not on the whole tend to negate the rea-

sonable inference of independent action.

Much of Omnicare’s theory is predicated on an imper-

missible flow of competitively sensitive information

between United and PacifiCare. But Omnicare’s evi-

dence purporting to show this illicit exchange demon-

strates only a circulation of generalized and averaged high-

level pricing data, policed by outside counsel, that is

more consistent with independent than collusive action.

Without evidentiary support for a conspiratorial infor-

mation exchange, Omnicare’s claims detailing how

United and PacifiCare put this information to use

become less plausible as well. For instance, if executives

did not possess inappropriate information, the strategic

options memo loses some of its inculpatory value, as

does the merger agreement carve-out.

The conspiracy theory is further impugned when all the

actions composing the alleged conspiracy are mapped

sequentially, and superimposed upon a chronological

timeline of Part D launch events and other events omitted

from the collusion narrative. The information exchange

allegedly began in spring 2005, but the evidence to

which Omnicare points (the Part D questions, the Due

Diligence Summary, etc.) did not come into existence

until the last few weeks of the months-long due diligence

process. Candid e-mails circulated among United ex-

ecutives immediately before the merger indicate that

52 No. 09-1152

the long-range plan at that time was to let PacifiCare

hash out its own contracts while working to move it to

United’s contract for 2007; they were consistent with

Stephens’s representations in the October e-mail. The

strategic options memo, which Omnicare presents as a

“blueprint,” was not drafted until the alleged collusion

was well underway, after United already had a contract

with Omnicare, and before Omnicare took the initiative

to reopen negotiations with PacifiCare. It is difficult to

reconcile the theory of an affirmative, ongoing con-

spiracy aimed at using RxSolutions as a stalking horse

with evidence showing that the very target of the con-

spiracy, Omnicare, was the party that made overtures

toward RxSolutions. Even if PacifiCare and United

were privy to one another’s information, there is no

evidence or even allegation that they were steering

Omnicare’s behavior.

Other critical links in the conspiracy narrative lose

much of their force when Omnicare’s independence is

factored in. First, Stephens’s e-mail, which in Omni-

care’s view set the stage for the final acts of the con-

spiracy, was precipitated by e-mails sent by Omnicare.

Second, United’s “suspicious” withholding of its con-

cerns is only suspicious in light of Omnicare’s execution

of PacifiCare’s “any willing provider” contract mere days

earlier. And even then, when the fact that the merger

had not yet been approved is added to the narrative,

United’s timing appears even more likely to have

been independently motivated, an inference bolstered

further by its subsequent attempts to renegotiate its

contract with Omnicare. (The timing of its disclosure

No. 09-1152 53

was also affected by its outside counsel and contract with

WHI, two facts Omnicare omitted from its allegations.)

Third, Omnicare was the party that refused to sign

United’s revised version of the contract, with knowl-

edge that PacifiCare’s contract did not have any sort of

restrictions on who could join it. Of course, this is not

to say that Omnicare made its proverbial bed and is

barred from recovery. (Though we note that “[t]he anti-

trust laws are not panaceas for all business affronts

which seem to fit nowhere else.” ECOS Elecs. Corp. v.

Underwriters Labs., 743 F.2d 498, 501 (7th Cir. 1984).) Yet

many key events in the alleged conspiracy could not

have happened without the specific inputs provided by

Omnicare, and that makes the competing inference of

independent action on the parts of Defendants more

difficult for Omnicare to overcome.

After considering the totality of Omnicare’s evidence,

both separately and holistically, we cannot conclude

that it would permit a reasonable jury to dismiss the

inference that United and PacifiCare were acting in

their independent interests. Omnicare thus cannot

satisfy the first requirement of its Sherman Act claim,

the existence of a contract, combination, or conspiracy.

We therefore affirm the district court’s grant of summary

judgment in Defendants’ favor on this claim.

B. State Law Claims

In addition to its federal Sherman Act claim, Omnicare

also alleged that Defendants violated an antitrust provi-

sion of Kentucky’s Consumer Protection Act, Ky. Rev.

54 No. 09-1152

Stat. § 367.175, committed (and conspired to commit)

common law fraud, and were unjustly enriched by their

actions. The district court properly invoked its supple-

mental jurisdiction over these claims, see 28 U.S.C. § 1367,

and ultimately granted Defendants’ motion for sum-

mary judgment on all of them.

Omnicare challenges only the dismissal of its fraud and

unjust enrichment claims. Though it asserted in its brief

that the district court improperly applied Illinois rather

than Kentucky law to these claims, at oral argument

Omnicare conceded that it did not “matter at all” which

law applied because both lead to substantially similar

results. “We routinely permit parties to voluntarily aban-

don previously briefed issues at oral argument as a

means of focusing the issues on appeal.” Anchor Glass

Container Corp. v. Buschmeier, 426 F.3d 872, 877 (7th Cir.

2005). We therefore take Omnicare at its word and

accept without further investigation the district court’s

conclusion that Illinois law applies to the state law

claims. Id.

1. Fraud

Omnicare’s fraud claim implicates a far smaller

universe of evidence than does its Sherman Act claim.

Indeed, it rests on a single document, Craig Stephens’s

October 31, 2005, e-mail to Tim Bien, and a single sentence

within that document, the second one. In that e-mail,

Stephens, of United, told Bien, of Omnicare, that

“PacifiCare’s Part D offering for 2006 is a unique contract

with CMS. If and when the deal closes, PacifiCare

No. 09-1152 55

will follow their own Part D product strategy through-

out the 2006 calendar year.” The two-sentence e-mail

was sent in response to Bien’s even briefer query, “When

the deal closes, will PacifiCare be contracted with

Omnicare as a result of the acquisition?”

For Omnicare to prove at trial that Stephens’s e-mail

constituted fraud under Illinois law, it would have to

demonstrate that United, acting through Stephens,

made a false statement of material fact, with knowledge

or belief that the statement was false, and with the

intent to induce Omnicare to reasonably rely and act on

the statement. It would also have to show that United

actually achieved such reliance, and caused injury to

Omnicare. Reger Dev., LLC v. Nat’l City Bank, 592 F.3d

759, 766 (7th Cir. 2010) (reciting Illinois law and citing

Redarowicz v. Ohlendorf, 441 N.E.2d 324, 331 (Ill. 1982)).

Omnicare contends it could do just that. It asserts that

the second sentence of the e-mail was literally false or

at least misleading because United and PacifiCare em-

ployed a concurrent Part D strategy after April 1, 2006,

the date when United officially joined PacifiCare’s con-

tract. It also alleges that United knew that the statement

was false, that the e-mail was part of a broader scheme

to induce Omnicare to sign PacifiCare’s “any willing

provider” contract and eventually move United’s Part D’s

enrollees to it, and that Omnicare was injured by the

noncompetitive rate that it agreed to when it did in fact

sign the contract.

The district court concluded that Omnicare was unable

to demonstrate a genuine issue of material fact as to

56 No. 09-1152

the first element, falsity of the statement, and granted

Defendants’ motion for summary judgment. See Celotex

Corp., 477 U.S. at 322. Omnicare disputes that conclu-

sion. It likewise takes issue with the district court’s

related conclusion that Omnicare failed to establish that

United and PacifiCare coordinated their Part D plans.

We review the district court’s grant of summary judg-

ment de novo, making all reasonable inferences in

Omnicare’s favor. See, e.g., Tri-Gen, 433 F.3d at 1030.

Omnicare contends that Stephens’s representation was

literally false, or, in the alternative, that it has raised a

material issue of fact as to whether United and Pacifi-

Care pursued separate Part D strategies throughout

2006. Omnicare fails to recognize, however, that

Stephens’s statement, even if false, was at best “a false

statement of intent regarding future conduct rather than

present or past facts.” Trade Fin. Partners, LLC v. AAR Corp.,

573 F.3d 401, 413 (7th Cir. 2009). Such statements are

considered “promissory fraud,” which as a general rule

is “not actionable under Illinois law unless the plaintiff

also proves that the act was a part of a scheme to de-

fraud.” Id. (quoting Ass’n Benefit Servs., Inc. v. Caremark

Rx, Inc., 493 F.3d 841, 853 (7th Cir. 2007)); HPI Health Care

Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672, 682

(Ill. 1989). As discussed at length above, Omnicare has

not put forth sufficient evidence to prove that Pacifi-

Care and United were engaged in a scheme to defraud

it, and consequently it cannot demonstrate that

Stephens’s e-mail was part of any broader scheme. Thus,

even if the district court was wrong in concluding that

Stephens’s statement was a true response to Bien’s

No. 09-1152 57

query, it properly prevented Omnicare’s fraud claim

from moving forward. By virtue of our de novo review,

we may affirm summary judgment on any basis sup-

ported in the record, Holmes v. Vill. of Hoffman Estates,

511 F.3d 673, 681 (7th Cir. 2007), and we do so here.

2. Unjust Enrichment

Omnicare also contends that United and PacifiCare

have been unjustly enriched as a result of their illegal

conspiracy against it. The district court granted summary

judgment to Defendants on this claim, reasoning that

Omnicare could not demonstrate an illegal conspiracy

and thus could not possibly demonstrate that De-

fendants were thereby enriched. The district court also

noted, in the alternative, that plaintiffs proceeding

under Illinois law cannot raise unjust enrichment claims

when “there is a specific contract that governs the rela-

tionship of the parties.” Omnicare, 594 F. Supp. 2d at 980

(quoting Stathis v. Geldermann, Inc., 692 N.E.2d 798, 812

(Ill. App. Ct. 1998)).

Omnicare challenges the district court’s second ratio-

nale. It asserts that a case decided after the Stathis

case cited by the district court clarified that unjust en-

richment claims are sustainable even where a contract

exists if the plaintiff alleges that it was fraudulently

induced into entering the contract. Appellant’s Br. 54.

Omnicare does not challenge, however, the district court’s

“fundamental[ ]” reason, Omnicare, 594 F. Supp. 2d. at 981,

for granting Defendants’ summary judgment motion on

its unjust enrichment claim.

58 No. 09-1152

Omnicare’s unjust enrichment claim unambiguously

(and fatally) rests upon the existence of a scheme

among Defendants. “[W]hen the plaintiff’s particular

theory of unjust enrichment is based on alleged fraud-

ulent dealings and we reject the plaintiff’s claims that

those dealings, indeed, were fraudulent, the theory of

unjust enrichment that the plaintiff has pursued is no

longer viable.” Ass’n Ben. Servs., Inc. v. Caremark Rx, Inc.,

493 F.3d 841, 855 (7th Cir. 2007). As Omnicare cannot

prove the existence of a conspiracy, it follows that it

cannot demonstrate that Defendants were enriched

thereby. We therefore affirm the district court’s grant

of summary judgment on Omnicare’s unjust enrichment

claim.

C. Motion for Partial Summary Judgment

Omnicare filed a motion for partial summary judg-

ment (alternatively denominated as a motion to strike)

as to five of Defendants’ affirmative defenses that it

contended could not succeed as a matter of law. The

district court denied the motion without explanation in

the concluding paragraph of its opinion and order. See

Omnicare, 594 F. Supp. 2d at 981. We review a district

court’s denial of a motion for partial summary judg-

ment the same way we review its grant of a motion for

summary judgment: de novo, with all inferences

construed in favor of the nonmoving party. Belcher v.

Norton, 497 F.3d 742, 747 (7th Cir. 2007). There is no need

to undertake such a review here, however, in light of our

resolution of Defendants’ motion for summary judgment

No. 09-1152 59

in their favor. Omnicare’s allegations have been resolved

and it is no longer necessary for Defendants to affirma-

tively defend themselves against them. Omnicare’s

motion challenging these defenses is consequently ren-

dered moot and its dismissal warrants no further con-

sideration.

III. Conclusion

The evidence in the record before us does not create

a genuine issue of material fact as to the existence of an

anticompetitive agreement among Defendants. Omnicare

therefore cannot prove that Defendants violated section 1

of the Sherman Act, and the district court properly

granted summary judgment in Defendants’ favor on

that claim. The lack of an agreement between PacifiCare

and United necessarily undermines Omnicare’s re-

maining state law claims, which were also properly

dismissed at the summary judgment stage. In light of

the dismissal of Omnicare’s claims, Omnicare’s motion

for partial summary judgment on the issue of Defen-

dants’ affirmative defenses cannot proceed either. We

thus A FFIRM the judgment of the district court.

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