IN THE UN ITED STATES DISTRICT COURT (2024)
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IN THE UN ITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
FEDERAL
TRADE
COMMISSION,
STATE OF CALIFORNIA, STATE OF
COLORADO, STATE OF ILLINOIS ,
STATE OF INDIANA, STATE OF
IOWA, STATE OF MINNESOTA, STATE
OF NEBRASKA, STATE OF OREGON,
STATE OF TENNESSEE , STATE OF
TEXAS , STATE OF WASHINGTON, and
STATE OF WISCONSIN,
Plaintiffs ,
1:22CV828
v.
SYNGENTA CROP PROTECTION AG ,
SYNGENTA CORPORATION, SYNGENTA
CROP
PROTECTION ,
LLC,
and
CORTEVA, INC . ,
Defendants.
MEMORANDUM OPINION AND ORDER
THOMAS D. SCHROEDER, District Judge.
In this action ,
states
allege
that
the Federal Trade Commission and a
two major manufacturers
dozen
of crop-protection
products have employed anticompetitive loyalty discount programs.
These programs
market
even
exclusivity
allegedly exclude
after
the
protections
generic competition
products '
have
patent
expired,
and
other
t hereby
from
the
federal
leading
to
supracompetitive prices for farmers.
Before the court are the
motions
Protection
of
Defendants
Syngenta
Crop
AG,
Syngenta
Corporation, Syngenta Crop Protection , LLC , and Corteva, Inc., to
dismiss all claims against them pursuant to Federal Rule of Civil
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 1 of 88
Procedure 12 (b) ( 6) .
opposition
133) .
(Doc.
(Docs. 94 , 99 . )
150),
Plaintiffs have responded in
and Defendants h ave replied
(Docs.
130,
The court held argument on the motions on December 1 , 2023.
(Doc. 157.)
For the reasons set forth below, the motions wi ll be
denied.
I .
BACKGROUND
A.
Factual Background
The
facts
"complaint")
out li ned in
Plaintiffs'
amended complaint
(the
(Doc. 1 49) , 1 which are taken as true for the purpose
of the present motion , show the following :
1.
Crop-Protection Product Industry
The Syngenta Group is a global company comprised of businesses
including
Defendants
Corporation ,
"Syngenta").
and
Syngenta
Syngenta
(Do C •
1 49
<J[
Crop
Crop
30 . )
Protection
Protection,
AG ,
Syngenta
LLC
(collectively
Syngenta Crop
Protection AG
oversees Syngenta ' s g lobal crop protection business.
( I d.
<J[
3 1.)
1
Limit ed portions of t he complaint and briefs remain under sea l.
{See
Doc. 148 {grant ing part ies ' mot ions to seal).)
Ci t ations are t o t he
unseal ed versions, except where t he court references sealed and redact ed
mat eri a l . While the court prel imi nar il y grant ed motions to seal portions
of the complaint in t his case , the court discloses here those portions
of the pleadings necessary for a full understanding of the allegations
and legal issues raised .
Courthouse News Serv. v . Schaefer, 2 F . 4th
318 , 327 {4 t h Cir. 2021) {"[A]ccess to [allegations in ] complaints . . .
is crucial to 'not only t he public's int erest in monitoring the
functioning of the courts but also t he integrity of the judiciary.'"
(quoting Doe v . Pub . Citizen , 749 F . 3d 246, 266 (4th Cir . 2014)); Doe,
749 F . 3d at 271 {"When parti es call on the courts, they must accept the
openness that goes wit h subsidized dispute reso l ution by publ ic {and
publicly accountable) offici als . " (internal quotation marks omitted)) .
2
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 2 of 88
Syngenta Corporation is a
corporate affiliate of Syngenta Crop
Protection AG and is the top- level Syngenta business incorporated
in the United States .
(Id.
<JI
Syngenta Crop Protection , LLC
32.)
operates Syngenta's U.S. crop-protection manufacturing, which is
the
second
largest
by
revenue
among
manufacturers in the United States.
crop-protection
(Id.
<Jl<Jl
allegedly operates as a single enterprise.
Corteva,
Inc.
33,
(Id .
48.)
<JI
product
Syngenta
35.)
("Corteva") was established to operate as an
independent agriscience business through the merger of E . I .
Pont de Nemours and Dow Chemical Company.
is the
(Id.
<JI
38.) 2
Corteva
third largest by revenue among crop-protection product
manufacturers in the United States.
(Id .
<JI
48.)
Defendants manufacture crop-protection products referred to by Plaintiffs as "pesticides" -
commonly
to control diseases,
weeds, insects , or other unwanted organisms that harm crops .
39,
40.)
fungicides.
(Id .
<j[<_j[
37,
<JI
include herbicides,
42.)
Every crop-protection product contains
sell
Ais
in
technical-grade
form,
(Id .
<JI
insecticides ,
(Id.
These
at least one active ingredient ("AI").
may
du
43 . )
which
and
Manufacturers
requires
further
processing before being sold in finished form, which is ready for
use by farmers .
(Id.
<JI
44.)
Ais are distinguished by the pests
2
To the extent the complaint includes allegations involving Corteva's
predecessor corporations, the court will simply refer to all such
entities as "Corteva.,,
3
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 3 of 88
they target, the effectiveness at controlling the target pest, and
t he crops upon which t he AI is used and registered for use, among
(Id.
other characteristics.
<JI
45.)
The AI's "mode of action" is
the chemical and biological manner in which the crop-protection
(Id .
product kills or controls the target pest.
46 . )
<JI
Farmers'
preferences for one AI over another may depend on variati ons in
t he mode of action.
Developers
mechanisms .
of
(Id.)
new
Ais
obtain
exclusive
use
through
two
First, under the Federal Insecticide, Fungicide, and
Rodenticide Act ("FIFRA"), 7 U.S.C. § 136 et seq., a developer of
crop-protection products must submit environmental impact data to
the
U.S .
Environmental
Protection
distribution in the United States.
Agency
prior
Upon approval,
to
sale
or
the developer
obtains 10-year exclusive protection from others citing t he data
the developer used to support its FIFRA submission.
52 .)
Second, under patent law,
patent
protection.
(Id .
<JI
(Id.
<j[<j[
51,
a developer can obtain 20-year
The
51.)
timing
of
the
FIFRA
application can effectively extend t he exclusive- use period beyond
the date the patent expires.
(Id.
<J[
52 . )
When both exclusive-
use protections expire, however, a generic manufacturer may enter
the market.
(Id.
<JI
54.)
Manufacturers of crop-protection products traditiona lly sell
to distributors,
who then sell to retailers,
farmers.
<JI
(Id.
55. )
Approximately
90%
who then sell to
of
crop-protection
4
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 4 of 88
products reach farmers through this traditional supply chain, and
about 90% of the traditional supply chain is managed by seven
In other words ,
distributors .
account
for
approximately 80%
products in the United States.
of all
(Id.)
these seven distributors
sales of crop-protection
This traditional channel of
distribution is allegedly the most efficient because it provides
access to retail and logistics networks and economies of scale ,
among other factors.
2.
(Id .
<JI
56 . )
Defendants ' Loyalty Programs
Plaintiffs allege that Defendants operate loyalty programs
intended to limit the distribution of competing generic products.
(Id.
<.II
59.)
Under these programs, Defendants offer "substantial"
payments as an end-of- year lump sum to distributors - allegedly up
to millions of dollars - conditioned on the distributors limiting
their purchases
of generic crop- protection products containing
specified post-patent Ais.
(Id.
the
expressed
loyalty
payment
is
<JI
60.)
The threshold to receive
as
a
percentage
of
the
distributors' total purchases of the AI , and the permissible amount
of generic AI a distributor may sell is referred to as "open space"
or "head space."
(Id . <JI 61.)
Typically, a distributor must source
less than 15 % of its total purchase of a certain AI from generic
manufacturers to qualify to receive the loyalty payment.
Syngenta implements its loyalty program,
through
written
marketing
agreements
with
(Id. )
known as "Key AI,"
distributors .
5
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 5 of 88
(Id.
<JI
66. )
Loyalty performance is calculated by dividing the amount
of qua l ifying AI purchased or so l d by the distributor in the year
by the
to t al of the AI purchased or sold by the distributor ,
including generics.
(Id.
<JI
68 . )
If the distributor ' s percentage
is above the threshold for the specific AI, it will reap a "special
marketing bonus . "
(Id.
<JI
69.)
If not, the distributor will lose
the entire loyal ty payment.
change the Ai s
Year-to-year,
Syngenta can
included in distributor marketing agreements as
well as the associated share thresholds and calculation methods .
(Id.
<JI
70.)
A similar program is offered for retailers as well ,
in which multiple top retailers nationally have participated .
':![<JI
71 , 72; Doc. 81
<JI
Under Corteva' s
(Id.
82 . )
program -
the Crops ,
Industrial Vegetation Management
( "CRPIVM")
Range
&
Pasture and
Loyalty Program,
a
distributor generally receives an annual payment for sourcing a
certain percentage of its purchases of an AI from Corteva.
149 ':![':I[ 75 , 77 . )
(Doc.
The percentage that Corteva pays varies but could
run as high as 11%.
(Id.
<JI
77.)
Corteva offers a second, higher
payment when a distributor reaches a high er threshold for the AI .
(Id.
':I[
75 . )
Moreover, the CRPIVM usually links together multiple
active ingredients within each offer, thus requiring a distributor
to hit the loyalty threshold for every AI in the offer to receive
the payment for any one AI .
(Doc . 81 <j[ 75 . )
Additionally, Corteva
typically permits a portion of any payment to be deferred into
6
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 6 of 88
subsequent
years,
which
would
otherwise
be
forfeited
if
the
distributor missed the l oyal ty t hresho l d for any AI in t he offer.
(Id.
<JI
Further ,
78.)
Cort eva conditi ons its Corporate Offer -
another annual payment offer that covers a broader range of Corteva
products -
on meeting the CRPIVM figure .
distributor fails to qualify,
(Id .
<JI
If a
79 . )
it could forfeit certain loyalty-
dependent payments under the Corporate Offer.
(Id. )
" [S]ubstantially all l eading distributorsn enter into l oyal ty
program agreements,
and Defendants promote broad participation
allegedly to assure distributors that others are not partnering
with generic manufacturers to undercut prices .
(Doc . 149
<JI
84.)
Moreover, the structure of the program is designed to make it less
likely that distributors will lower prices in anticipation of a
future loyalty payment because of its complexity, uncertainty, and
timing.
(Id .
<JI
85.)
Defendants "regularlyn audit distributors ,
which has a llegedl y l ed to withhe l d l oyal ty payments.
<JI
87 . )
(Doc. 8 1
Defendants also "rarelyn grant exceptions for missing the
threshold without good cause .
(Doc .
149
<JI
87 . )
Additionally ,
they have allegedly retaliated against distributors who fail to
reach the loyalty thresholds by canceling distribution contracts,
delaying
access
to
new
products ,
and
al l ocation during a supply shortage.
(Id.
withholding
<JI
product
88.)
7
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 7 of 88
Plaintiffs focus on the fo l lowing Ai s:
Syngenta AI
Azoxystrobin
(fungicide)
Mesotrione
(herbicide)
Metolachlor 3
(herbicide)
Corteva AI
Rimsulfuron
(herbicide)
Oxamyl
(insecticide/
nematicide)
Acetochlor 4
(herbicide)
Current
Loyalty
Threshold
Date Added
to Loyalty
Program
Patent
Expiration
FIFRA
Expiration
92%
20 13-14
2014
2010
92%
2014 -1 5
2008
2014
2008
2010
Patent
Expiration
FIFRA
Expiration
Current
Loyalty
Threshold
Early
2000s
Date Added
to Loyalty
Program
85%
2017-18
2006
2007
90%
After 2017
Merger
1988
1987
95%
20 1 6- 17
2000
2007
90 %
(See id . 11 89-150 ; Doc . 81 11 89-150.)
Plaintiffs allege that
distributors of each of these Ais have strictly managed their
purchases and sales to ensure that they stay above the respective
threshold t o receive the payments.
Further ,
Plaintiffs
allege,
generic
manufacturers
attempted to enter the market for each AI -
have
with demand from
farmers - but have had little to no success because distributors
Syngenta produces "s-metolachlor," which was phased in by 2001 over
the original metolachlor. (Doc. 1 49 '][ 114.) However, Syngenta allegedly
includes sales of generic original metolachlor in the denominator of its
calculation of a distributor's loyalty figure.
(Id . 'l[ 115.)
3
4
Acetochlor is manufactured by a joint venture of Corteva and Bayer .
Corteva apparently treats the sale or purchase of
(Doc . 149 '][ 142 .)
Bayer acetochlor as it would a sale or purchase of Corteva acetochlor .
(Doc . 81 <JI 146 .)
8
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 8 of 88
would not purchase the generic.
As to azoxystrobin ,
two
generics have exited the market entirely, and one that attempted
to mix azoxystrobin was "hindered in its attempt to market" because
of the Key AI program.
two
generics
delayed
(Doc . 14 9
or
<J[ <J[
9 6- 9 7 . )
As to mesotrione,
terminated
entry,
and
a
third
that
developed a mixture product dropped it due to the Key AI program.
(Id.
<J[
As
105.)
to
metolach l or,
a
generic
manufacturer
had
considered bringing a mixture to market but chose not to do so
because of the Key AI program .
(Id .
<J[
120.)
As to rimsulfuron ,
at least one generic canceled or deferred entry plans ,
despite
apparent demand from farmers to bid on generics, because of the
CRPIVM program.
(Id.
<J[
As to oxamyl , Corteva's production
132.)
of oxamyl stopped for a span of roughly two years, generics entered
the
market
with
"plummeted"
upon
"relative[]
Corteva' s
success[],"
re - entry
loyal ty program appl ied to oxamyl.
acetochlor,
but
into
(Id.
the
<J[<J[
generic
market
1 36-38 .)
sales
with
the
And as to
the CRPIVM program has allegedly deterred generics
from the market altogether, even t hough one generic firm has had
success selling the AI overseas.
Plaintiffs
allege
that
the
(Id.
presence
of
<JI
149 . )
For each AI,
generics
has
imposed
downward pricing pressure.
The complaint further alleges t hat Syngenta supplies Corteva
with mesotrione and metolachlor .
(Id .
<J[<j{
109, 122 . )
Defendants
allegedly struck this agreement as an incentive to keep Corteva
9
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 9 of 88
from purchasing generics of these two Ais.
does not penalize distributors
Corteva products
<[<JI
containing
In exchange , Syngenta
in the Key AI program who buy
these
two
Syngenta
Ais .
(Doc .
81
109 , 122.)
3.
Alleged Market and Competitive Harm
Plaintiffs allege that Syngenta has had monopoly and market
power as to azoxystrobin,
mesotrione, and metolachlor ,
and that
Corteva has had monopol y and market power as to rimsulfuron and
oxamyl and market power as to acetochlor .
(Doc. 149 <JI<JI 151, 152 . )
Plaintiffs claim two relevant product markets :
(a) A relevant product market exists that is no broader
t han the active ingredient , consisting of ( 1) active
ingredient included as a component of an EPA-registered
finished crop-protection product for sale in the United
States, and (2) technical-grade or manufacturing-use
active ingredient to be formulated into an EPA
registered finished crop- protection product for sale in
the United States; a nd
(b) A relevant product market(s) also exists that is no
broader than EPA-registered crop-protection products for
sale in the United States that contain the active
ingredient.
(Id.
<JI
155 . )
Syngenta' s market share for azoxystrobin, mesotrione,
a nd metolachlor exceeded 70% from at least 2017 through 2020.
<JI
1 61. )
(Id .
Corteva's market share for rimsulfuron and oxamyl also
e xceeded 70% for those same years ,
whi l e
its market share for
acetochlor exceeded 40% (with another roughly 50% attributabl e to
Bayer , its joint venture partner for t hat AI).
(Id .
<][<JI
162, 163.)
In all , Plaintiffs allege that Defendants have foreclosed generics
10
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 10 of 88
from "approximately 70% or more" of the market.
Each
AI
has
"particular
(Doc. 81
characteristics
differentiate it from other active ingredients . "
and
<JI
171.)
uses
that
(Doc. 149 <JI 157 . )
Azoxystrobin "can be used across all major row crops
[and]
has
growth-enhancing effects not proven in other active ingredients . "
Mesotrione has "superior efficacy and crop safety,
low use rate."
(Id . )
and
to
so
tends
and a
Metolachl or has "superior water solubility ,
perform better
in
dry
conditions [ ,
and
it]
outperforms other active ingredients in warmer conditions, is more
' crop friendly , ' and can be used on a broader spectrum of crops."
(Id. )
Rimsulfuron "can be used on a
broader range of crops,
controls a wider spectrum of weeds , can be used on both pre- and
post-emergence,
and has
more
application methods,
no dormancy
restrictions , and a lower use rate."
(Id . )
directly onto crops ,
similar insecticide active
whereas other,
Oxamyl can be "sprayed
ingredients must be applied at the root level or mixed into the
soil[, and] is also safer for crops and better for soil health[.]"
(Id.)
Acetochlor "tends to perform better in wetter and cooler
conditions,
[and] tends to have better weed control early in the
growing season and is more effective against certain weed species . "
(Id.)
Plaintiffs
substitutes
allege
to
supracompetitive
that
prevent
prices
of
other
Ais
Defendants
their
are
not
from
c l ose
enough
maintaining
crop-protection
products
11
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 11 of 88
containing these six Ais .
(Id.
<J[
158.)
Moreover ,
substantial
barriers exist to enter the market for these Ais no twiths tanding
(Id.
the loyal t y programs.
regulatory,
from the
160.)
<J[
and legal barriers
EPA,
These capital ,
include
technical ,
"obtaining registration
developing manufacturing processes
and sourcing
[the] active ingredient , and paying data compensation costs to the
initial active ingredient registrant ."
(Id.)
The loyalty programs
impose a substantial barrier by limiting generic manufacturers '
access to the traditional distribution channel .
Plaintiffs
contend that
competitive harms .
First ,
the
loyalty programs
t he programs
cause
"forclos [e]
anti-
actual or
potential competitors from access to distribution services ," or to
" efficient
distribution
distribution channel).
services"
(Id.
<J[<_J[
(i.e .,
1 69 , 170.)
the
traditional
Although t he programs
are nominally voluntary , Plaintiffs allege that the mere prospect
of
rece i ving
a
payment
is
sufficient
incentive
to
induce
distribu tors to participate and to limit or forego purchases from
generic
compe t i t ors .
(Id.
<_J[
173 .)
Allegedly,
one
generic
manufacturer represented that " this dynamic is so we ll establ ished
in
the
industry
that
it
is
futile
to
even
approach
distributor that is subject to loyalty requirements."
(I d .
a
large
<J[
178.)
Absent t he loyal ty programs, Pl aintiffs al l ege , sal es of generics
would be significantly higher and would exceed t he open space
presently allowed for each AI, thus decreasing prices overall for
12
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 12 of 88
farmers.
(Id.<[ 180.)
Second,
programs
and relatedly,
have
prevented,
Plaintiffs charge that the loyalty
delayed,
and
expansion by generic manufacturers into,
diminished
entry
as well as caused the
exit from, the market for products containing the Ais.
see
also,
id .
e .g. ,
<[<[
96-97
and
(demonstrating
(Id .
that
<_j[
182;
generic
manufacturer of azoxystrobin mixture was "hindered in its attempt
to
market";
id .
<[
132
(alleging
t hat
at
leas t
one
generic
manufacturer of rimsulfuron canceled or deferred entry plans,
despite apparent demand from farmers to bid on generics, because
of the CRPIVM program).)
Third, t hese programs have reduced the
ability and incentive for generic manufacturers to innovate cropprotection products containing the Ais.
the
programs
have
resulted
for
in
(Id. <[ 186.)
supracompetitive
retailers
and farmers
products
<[ 190.)
Plaintiffs point to Defendants'
Finally ,
prices
containing the Ais.
for
(Id.
internal studies that
allegedly demonstrate that the loyalty programs have curtailed
generic entry and sustained higher prices t han would otherwise
prevail.
B.
(Id.
<JI<[
195-99.)
Proc edural History
On September 29, 2022, Plaintiffs filed t his action seeking
declaratory,
injunctive,
penalties .
(Doc . 1 . )
complaint,
equitable
monetary
relief,
and
civil
Defendants moved to dismiss the original
after which Plaintiffs
filed an amended complaint.
13
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 13 of 88
(Doc. 79 ; Doc . 149 (lesser-redacted complaint).)
Now before the
court are Defendants' motions to dismiss the amended comp l aint .
(Docs . 94 , 99.)
respective
Following this court's order granting the parties '
motions
to
seal
(Doc.
148) ,
the
operative
public
complaint i s at docket entry 1 49. 5
Plaintiffs allege sixteen counts under state and federal law.
Under
federal
l aw,
Plaintiff Federal Trade
Commission
("FTC" )
alleges violations of Section 5 of the FTC Act , 15 U.S.C. § 45(a),
and all Plaintiffs allege violations of Section 3 of the Clayton
Act , 15 U. S . C. § 14 , and Sections 1 and 2 of the Sherman Act , 15
U. S . C. §§ 1, 2 .
under
state
Colorado ,
(Doc . 149 i~ 203- 10.)
law and
Illinois ,
are
The remaining c l aims arise
raised by the
Indiana ,
Iowa ,
states
Minnesota ,
Te n nessee, Texas , Washington , and Wisconsin . 6
of California ,
Nebraska ,
Oregon ,
(Id . ii 2 12-76 . )
5
Separ ate simi lar act i ons brought by farmer s have been consolidated by
the Uni ted St ates Judi cial Panel on Multidis t r i c t Li tigati on and
transferred to thi s court for pretrial p r oceedi ngs .
(See Doc . 78 i n
1 : 23-md-3062 (amended consoli dat ed complai n t ) ; I n r e Crop Pr o t ection
Pr ods . Loyalt y Pr ogram Antitrust Liti g . , 655 F . Supp . 3d 1380 (J.P . M. L .
2023) .
6
Specifical ly, t he s t ate law clai ms a ri se under Californi a's Cartwri gh t
Act , Califo r nia Business and Pr o f ess i ons Code § 16700 e t seq . , and
California' s Unfair Compet ition Law, California Business and Prof essions
Code§ 17200 e t seq . ; t he Colorado Ant itru s t Act , C . R . S. § 6-4-104 and
C.R.S. § 6- 4 - 105 ; Secti on 7 of t he Illinoi s Ant i t rus t Act , 740 ILCS 10/1
e t seq. ; t he Indi ana Decepti ve Consumer Sales Act , Ind. Code§ 24 - 5- 0.5 1 e t seq. and t he Indiana Ant itrust Act , Ind. Code§ 24-1-2-1; t he Iowa
Compet i t ion Law, I owa Code Chapt er 553, and t he Iowa Consumer Fraud Act ,
Iowa Code § 714.16 ; the Minnesota Ant itrust Law of 1971, Minnesota
St atut es Sect ions 3250.49- .66; t he Nebraska Consumer Prot ect ion Act,
Neb. Rev. St a t . §§ 59-1 602 et seq . , and Neb . Rev . St at . § 84 - 21 2; t he
Oregon Antit rust Law , Oregon Revised Stat utes 646 . 705 to 646 . 836 ; the
14
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 14 of 88
Following oral argument on the motions to dismiss , they are
ready for reso l ution.
II .
ANALYSIS
A.
Legal Background
1.
Mo tion t o Dismiss Standar d
A Rule 12 (b) ( 6)
sufficiency
of
a
motion to dismiss is meant to "test []
complaint"
and
not
to
" resolve
the
contests
surrounding the facts, the merits of a claim, or the app l icabi l ity
of defenses . "
Republican Party of N. C . v . Martin ,
952 (4th Cir . 1992).
980 F . 2d 943,
To survive such a motion , " a complaint must
contain sufficient factual matter , accepted as true , to ' state a
claim to relief that is plausible on its face . ' "
Iqbal ,
556
U.S.
662 ,
678
(2009)
Twombly, 550 U.S . 544 , 570 (2007 )).
Ashcroft v .
(quoting Bell Atl.
Corp .
v.
In considering a Rule 12 (b) (6)
motion , a court "must accept as true all of the fact ual allegations
contained in the complaint , " Erickson v . Pardus, 551 U.S. 89 ,
(2007)
94
(per curiam) , and all reasonable inferences must be drawn
in the non- moving part y ' s favor , I b arra v . Uni t ed States , 120 F . 3d
472 , 474 (4th Cir. 1 997) .
Ru l e 12(b) (6) must be read in l ight of
Ru le 8' s
standard that a
complaint con tain "a short and plain
statemen t
of the claim showi ng that the pleader is entitled to
Tennessee Trade Practices Act, Tenn . Code Ann. §§ 47 - 25 - 101 et seq . ;
Sections 15 . 20(a) and 15 . 20(b) of the Texas Business and Commerce Code
and Section 402 . 006 of the Texas Government Code; the Washington Consumer
Protection Act , RCW 19 . 86 . 030 et seq . ; and the Wisconsin Antit rust Act ,
Wis . Stat . Ch . § 133 . 03 et seq .
15
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 15 of 88
relief."
Fed . R. Civ. P. 8 (a) (2).
2.
Federal Antitrust Statutes
Plaintiffs allege violations of the Sherman Act (sections 1
and 2)
and Clayton Act
(section 3) ,
and Pl aintiff FTC alleges
violations
of
the
Federal
Trade
Commission
Section
of
the
Sherman
Act
prohibits
1
Act
(section
" [e]very
5).
contract ,
combination in the form of trust or otherwise , or conspiracy, in
restraint of trade or commerce among t he several States , or with
foreign
nations . "
15
u. s .c.
§
1.
Section
2
prohibits
" monopoliz[ing] , or attempt [ing] to monopolize , or combin [ ing] or
conspir[ing] with any other person or persons, to monopolize any
part of the trade or commerce among the several States . "
§
2.
15 U. S.C .
A violation of Section 2 consists of two elements :
(1)
possession of monopoly power and (2) "maintenance of that power as
distinguished from growth or development as a consequence of a
superior product, business acumen, or historic acc i dent."
Kodak Co .
(1992).
v.
Image Technical
Servs .,
Inc.,
504 U. S .
Eastman
451 ,
48 1
Monopoly power is defined as the ability "to control
prices or excl ude competition . "
United States v . Grinne l l Corp.,
384 U. S . 563 ( 1 966 ) (internal quotation marks omitted) .
Al though
evidence of such abi l ity is " only rare l y available , " courts turn
to circumstan tia l
evidence -
such as a company's share of the
market - to determine whether monopoly power exists .
United States
v . Dentsply Int ' l , Inc ., 399 F . 3d 181, 187 (3d Cir . 2005)
(quoting
16
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 16 of 88
United States v.
2001)).
Microsoft Corp.,
253 F.3d 3 4,
51
(D.C.
Cir.
Maintenance of that power requires some illegal conduct
that forecloses competition,
destroys a competitor.
gains a
competitive advantage,
or
Eastman Kodak, 504 U.S . at 482-83.
Section 3 of the Clayton Act makes it unlawful for
any person engaged in commerce .
. to lease or make a
sale or contract for sale of goods
for use,
consumption, or resale within the United States.
. or
fix a price charged therefor , or discount from, or rebate
u pon , such price, on the condition, agreement, or
understanding that the lessee or purchaser thereof shall
not us e or deal in the goods . . . of a competitor or
competitors of the lessor or seller, where the effect of
such lease , sale , or contract for sale or such condition,
agreement, or understanding may be to substantially
lessen competition or tend to create a monopoly in any
line of commerce.
15 u.s.c. § 14.
Section 5 of the FTC Act makes illegal "[u ] nfair methods of
competition in or affecting commerce , and unfair or deceptive acts
or practices in or affecting commerce . "
15 U. S.C .
The act, while not solely focused on antitrust ,
linked to the antitrust laws ."
Ralston Purina Co.,
§
45(a) (1).
is "nonetheless
Chuck's Feed & Seed Co., Inc. v.
810 F .2d 1289,
1293
(4th Cir .
1989).
The
Supreme Court has stated that the act was "designed to supplement
and bolster the Sherman Act and the Clayton Act,
[]
to stop in
their incipiency acts and practices which, when full blown, would
violate those Acts."
Fed. Trade Comm'n v. Motion Picture Advert.
Serv. Co., 344 U.S . 392, 394-95 (1953 ) (internal citation omitted).
17
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 17 of 88
The
act
"functions
as
a
kind of penumbra
around the
federal
antitrust statutes," Chuck' s Feed, 810 F.2d at 1292-93, such that
any practice that violates the Sherman Act or the Clayton Act also
violates the FTC Act.
See Fed. Trade Comm'n v.
Dentists, 476 U. S. 447 , 454 (1986)
Ind.
Fed'n of
("The standard of 'unfairness'
under the FTC Act is, by necessity, an elusive one , encompassing
no t
only practices that violate the Sherman Act and the other
antitrust
laws,
[]
but
also
practices
t hat
t he
Commission
determines are against public policy for other reasons." (internal
citations omitted)).
The extent to which these four provisions
impose varying requirements on a plaintiff is discussed in more
detail below.
3.
Exclusive Dealing
Plaintiffs allege that Defendants'
loyal ty rebate programs
are illegal exclusive dealing arrangements.
An exclusive dealing
arrangement is one in which a buyer agrees to purchase certain
goods or services only from a particular seller for a certain
period of time.
Phillip E. Areeda & Herbert Hovenkamp, Antitrust
Law~ 1800a (4th & 5th ed. 2023).
Neither absolute exclusivity
nor an express agreement is necessary for an exclusive dealing
arrangement to violate antitrust laws .
ZF Meritor, LLC v . Eaton
Corp., 696 F.3d 254, 270, 282 (3d Cir. 2012); Tampa Elec. Co. v.
Nashville Coal Co. , 365 U.S . 320 , 328
f oreclosed
by
the
contract
must
be
(1961)
found
("[T]he competition
to
constitute
18
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 18 of 88
a
substantial
share
of the
relevant market."
(emphasis
added)) .
Although not "per se " i llegal , exclusive dealing arrangements may
give rise to cognizable claims under all four statutory provisions
alleged here.
See, e .g., Grinnell Corp., 384 U.S. at 576 (Sherman
Act § 2); ZF Meritor,
696 F.3d at 281
(Sherman Act §§ 1 and 2,
Clayton Act§ 3) ; LePage's Inc . v. 3M, 324 F . 3d 141, 157 & n . 10
(3d Cir . 2003)
(same); Allied Orthopedic Appliances Inc. v. Tyco
Health Care Grp. LP, 592 F . 3d 991 ,
Act
§
1); McWane,
996 (9th Cir. 2010 )
783 F . 3d 814 ,
827
Exc l usive contracts serve many pro-competitive purposes.
ZF
(11 th Cir. 2015)
Meritor ,
Inc. v. Fed . Trade Comm'n,
(Sherman
(FTC Act
§
696 F . 3d at 270.
5).
On the demand side ,
they can assure
supply, protect against rises in price, enable long-term planning
based on known costs , and reduce the expense and risk of storing
goods that have fluctuating demand.
States, 337 U.S. 293, 306
substantially
reduce
(1949) .
selling
Standard Oil Co . v. United
On the supply side, they can
expenses ,
protect
against
price
fluctuations , justify and enable capital expenditu res, and shield
against counterattacks by competitors.
"virtually
every
contract
to
buy
Id . at 306- 07.
' forecloses'
or
Indeed,
'excludes'
alternative sellers from some portion of the market, namely the
portion consisting of what was bought."
Grinnell Corp . ,
(emphasis
724 F . 2d 227,
removed) .
Barry Wright Corp. v. ITT
236
(1st Cir.
1983)
(Breyer ,
Accordingly,
whether a
contract
rises
19
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 19 of 88
J .)
to
illegal
exclusivity,
"rather
than
merely
a
competition, can be difficult to discern[.]"
F.3d at 58.
antitrust court
in
as
Microsoft Corp., 253
acts ,
general rule
which
reduce
competitive acts , which increase it. "
(e . g.,
vigorous
are myriad," posing a challenge for an
"stating a
exclusionary
While
of
"[T]he means of illicit exclusion , like the means of
legitimate competition,
between
form
exclusive dealing is
alleged here,
distributor),
it
has
a
the
for distinguishing
social
welfare,
Id.
formally a
vertical
restraint
restraint
between manufacturer
potential
to
have
adverse
on horizontal
competition.
Jefferson Par.
Dist.
v.
U. S .
(1984)
2
concurring).
Hyde,
466
2,
45
and
economic
consequences
No .
and
Hosp.
(O'Connor,
J .,
More specifically, an exclusive dealing arrangement
runs afoul of the antitrust laws when it unreasonably deprives
other suppliers of a market for t heir goods or allows one buyer of
goods unreasonably to deprive other buyers of a needed source of
supply.
exclusive
Id.
The potential collateral consequences of illegal
dealing
include
higher
prices,
reduced quality, or slower innovation.
restricted
output,
McWane, Inc . , 783 F . 3d at
827.
B.
Defendants ' Grounds for Motion to Dismiss
Defendants
complaint : first,
argue
two
primary
grounds
to
dismiss
the
t hey contend that Plaintiffs fail to allege a
relevant product market; and second, they argue that Plaintiffs
20
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 20 of 88
fail
to
allege
anticompetitive
conduct
and
injury .
Syngenta
further argues that the claims against Syngenta Crop Protection AG
and Syngenta Corporation should be dismissed .
Corteva argues that
the FTC Act violates Article II of the U.S .
Constitution,
requiring dismissal of the complaint.
thus
And finally , all Defendants
argue that the state law claims should be dismissed on a range of
grounds.
The court turns first to the thresho ld question of whether
Plaintiffs allege a relevant product market.
1.
Relevant Product Market
Defendants contend that the complaint is defective because it
fails to allege a cognizable product market .
(Doc. 95 at 17; Doc .
100
is
at
37.)
A
relevant
product
market
defined
by
"the
reasonable interchangeability of use or the cross-elasticity of
demand between the product itself and substitutes for it."
Shoe Co. v . United States, 370 U.S. 294, 325 (1962).
Brown
Courts begin
with a preliminary inquiry into market definition because it serves
as the frame through which the court analyzes monopoly power and
substantial market foreclosure .
E.I. Du Pont De Nemours & Co. v .
Kolon, 637 F . 3d 435, 441 (4th Cir . 2011); Ind . Fed'n of Dentists,
4 7 6 U.S .
at
4 60
(" [T] he purpose of the
inquiries
into market
definition and market power is to determine whether an arrangement
has the potential for genuine adverse effec t s
on competition . "
(emphasis in original)).
21
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 21 of 88
Plaintiffs allege two product markets in the United States.
One is the AI itsel f ,
(Doc . 149
form .
<J[
in both its finished and technical -grade
155 . )
The other is crop-protection products
that contain the active ingredient.
Defendants do not
contest the markets ' geographical scope or that Plaintiffs allege
more than one market .
Corteva argues that Plaintiffs ' market definitions are only
two sentences that vaguely describe general characteristi cs of the
Ais
that
amount
products. "
to
"alleged advantages
( Doc . 9 5 at 19 . )
they
have
over
other
In Corteva ' s view, Plaintiffs have
an obligation to do more - namely, to expl ain why products without
those characteristics are not reasonably interchangeable .
(Id . at
18 (cit i ng Bayer Schering Pharm AG v. Sandoz , Inc. , 813 F. Supp.
2d 569 ,
575
(S.D . N. Y. 20 11) ; Todd v . Exxon Corp ., 275 F . 3d 191,
200 (2d . Cir . 2001)) . )
l abe l
registrations
In support , Corteva points to several EPA
outside
of
the
record that ,
per Corteva,
demonstrate that the alleged produ ct markets are both too narrow
and too broad.
This follows , according to Corteva , because these
EPA l abel
registrations show that the EPA has registered crop
pro tection
produ cts
that
(1)
contain
Ais
alleged markets but have different uses,
outside of Pl aintiffs '
(Id . a t 19- 20 . )
within
and
(2)
Plaintiffs'
are products
alleged markets but share similar uses.
Syngenta argues that Plaintiffs ' market definition
is unreasonably narrow because each market is only a single AI.
22
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 22 of 88
(Doc.
100
at
38-40 . )
In
support ,
Syngenta
points
to
other
antitrust proceedings outside of t he record where t he FTC and the
U.S. Department of Justice have alleged broader crop-protection
product markets with multiple Ais.
(Id. at 41-42 . )
For example,
Syngenta cites United States v . Bayer AG, 83 Fed. Reg. 27652 , 27653
(DOJ
June
herbicides '
2018) ,
13,
as
"analyzing
alleged
' fou ndational
and ' nematicidal seed treatment' markets ,ll and Ciba-
Geigy Ltd ., 62 Fed. Reg. 409, 4 12 (FTC Jan. 3 , 1 997), as "analyzing
alleged
'corn herbicides
market -
includ ing metolachlor -
emergent control
for
pre-emergent control
of grasses'
and ' corn herbicides for post-
of broadleaf weeds'
market ."
Syngenta
contends that FTC ' s effort to allege narrower product markets here
is not based on "different facts ,
philosophy of the
FTC ' s
but instead on the evolving
Chair," and demons trates that "FTC is
attempting to gerrymander its way to an antitrust victory ."
(Id.
at 42 (internal quotation marks omitted).)
Plaintiffs respond that their product markets are supported
by
ample
factual
allegations.
(Doc.
150
at
52 . )
Namely ,
Plaintiffs point to the conduct of Defendants, who des ign the ir
loyal ty programs
around each
Plaintiffs
"characteristics
allege
individual AI .
and usesll
Further,
and " industry or
public recognition" for each AI:
Azoxystrobin has " growth-enhancing effects not proven in
other active i ngredients."
Mesotrione has "superior
efficacy and crop safety" "[c ]ompared to other, similar
23
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 23 of 88
herbicide
active
ingredients."
Metolachlor "has
superior water solubility," and "outperforms other
active ingredients" in warmer and drier conditions .
Rimsulfuron "has more application methods, no dormancy
restrictions , and a lower use rate " than similar
chemicals.
Oxamyl , unlike "similar insecticide active
ingredients, " "can be sprayed directly onto crops." And
acetochlor " tends to perform better" than similar
herbicides "in wetter and cooler conditions," and has
" better weed control early in the growing season."
(Id.
(quoting
Doc.
149
1
157)
(internal
citations
omitted).)
Plaintiffs also allege that each AI is distinguishable enough that
farmers "may prefer it over others."
1 46) .)
(Id. at 54 (citing Doc. 149
Finally, Plaintiffs contest that t he court should take
judicial notice of the EPA label registrations and prior FTC and
DOJ antitrust proceedings at this stage .
A
relevant
product
market
interchangeable products.
products
is
include
all
reasonably
United States v . E . I . du Pont de Nemours
& Co ., 351 U.S . 377, 404 (1956).
of
must
(Doc. 150 at 58-59.)
generally
The reasonable interchangeability
determined
according
to
the
cross-
elasticity of demand for the product and its alternatives .
It's
My Party, Inc. v. Live Nation, Inc., 811 F.3d 676, 683 (4 th Cir.
2016).
In other words,
courts look to the degree to which a
defendant would sacrifice sales to alternative products by raising
t he price of its goods.
Eastman Kodak ,
504 U.S. at 469.
therefore more than simply technical interchangeability .
It is
Rothery
Storage & Van Co. v. Atlas Van Lines, Inc., 792 F .2d 210, 218 n . 4
(D. C. Cir. 198 6)
(discussing functional subs titutability as one
24
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 24 of 88
factor among many as it relates to "the economic criteria that
make one market distinct from another").
Market definition is a question of fact .
442
(collecting cases).
fact-intensive
inquiry,
dismiss for failure
Kolon , 637 F.3d at
"Because market definition is a deeply
courts
hesitate
to plead a
to
grant
motions
to
relevant product market."
(quoting Todd, 275 F .3d at 199-200).
Id.
Nevertheless, there is "no
absolute rule against the dismissal of antitrust claims for failure
to allege a relevant product market . "
at 199-200).
Id . (quoting Todd, 275 F.3d
"No party can expect to gerrymander its way to an
antitrust victory without due regard for market real ities."
My Party, Inc ., 811 F . 3d at 683 .
pleadings
is
appropriate
It's
"Cases in which dismissal on the
frequently
involve either
(1)
failed
attempts to limit a product market to a single brand, franchise,
institution ,
or comparable entity that competes with potential
substitutes or (2) fai l ure even to attempt a plausible explanation
as to why a market should be limited in a particular way."
Kolon,
637 F . 3d at 442 (quoting Todd, 275 F.3d at 199-200).
Under this fact-intensive inquiry, the scope of the relevant
product market differs on a case-by-case basis .
For example, in
Eastman Kodak , 504 U.S . at 481-82, the Supreme Court held that a
properly constituted market may be comprised of a single product.
In the pharmaceutical context,
lower courts have ruled that a
brand-name drug and its generic analogs can comprise a relevant
25
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 25 of 88
product market .
In re Zetia (Ezetimibe) Antitrust Litig. , MDL No.
2: 1 8-md-2836 , 202 1 WL 66897 1 8 , at *1 8-20 (E . D. Va . Nov . 1, 202 1 ),
adopted in full by 587 F . Supp . 3d 356
(E.D. Va . 2022);
In re
Nexium (Esomeprazole) Antitrust Litig., 968 F . Supp. 2d 367, 388
(D. Mass. 2013) ; In re Cardizem CD Antitrust Litig. , 1 05 F. Supp.
2d 61 8 , 680- 81 (E . D. Mich . 2000)
(accepting plaintiffs ' contention
on motion to dismiss that branded and generic versions of heart
medication constitute a single market), aff ' d, 332 F.3d 896 (6th
Cir. 2003) .
Whether a market is plausible when comprised of a
single product - or many products - " can be determined only after
a
factua l
inquiry
consumers."
into
the
'commercial
realities '
faced
by
Eastman Kodak , 504 U. S. at 482 (quoting Grinnell Corp ,
384 U.S. at 572).
Courts employ a variety of methods to de t ermine if a product
market is properly constituted.
consider
( 1) the Defendants '
Plaintiffs urge the court to
own conduct;
(2)
the "hypothetical
monopolist test"; and (3) the factors set out in Brown Shoe , 370
U. S.
294 .
(Doc .
150
at
49- 52 . )
Courts
Plaintiffs '
first
proposed methodology -
generally
the
consider
Defendants '
own
conduct and recognition of the market - under the assumption that
" economic actors usually have accurate perceptions of economic
rea l ities."
Todd,
275 F. 3d at 205
(collecting cases)
(quoting
Rothery Storage, 792 F . 2d at 218 n . 4) ; Kolon , 637 F . 3d at 442 - 43
(considering
the
"area
within
which
the
defendant
and
26
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 26 of 88
its
competitors view themse lves as competing").
Plaintiffs' second proposed methodology is the hypothetical
monopolist test ("HMT") .
The HMT is an aid in determining if the
relevant product is properly constituted.
The court begins by
hypothesizing that every good as alleged in the product market is
under the control of a hypothetical monopolist.
Am.
United States v .
Express Co., 838 F.3d 179, 198-99 (2d. Cir. 2016).
Under such
conditions, if the hypothetical monopolist could profitably impose
a
small
but
significant
and
nontransitory
increase
("SSNIP"), then the product market is properly defined.
contrast,
the
product
market
is
improperly
defined
in
price
Id .
By
when
the
hypothetical monopolist imposes the SSNIP unprofitably because the
alleged market does not include reasonably interchangeable goods
-
i.e., goods that consumers will shift demand toward in light of
the SSNIP.
test,
Id.
While the Fourth Circuit has yet to endorse this
other circuits have at least acknowledged it or outright
embraced it as a viable methodology in the context of defining
markets.
See, e.g., Fed. Trade Comm'n v. Penn State Hershey Med.
Ctr . , 838 F . 3d 327, 339-41 (3d Cir. 2016)
(adopting HMT as proper
test to define market); Fed . Trade Comm' n v . Sanford Health, 926
F.3d 959 ,
964
(8th Cir. 2019)
(holding not clear error to define
relevant market with HMT); Fed. Trade Comm'n v. Advocate Health
Care Network, 841 F .3d 460, 473 (7th Cir. 2016)
Am.
(endorsing HMT) ;
Express Co., 838 F.3d at 198-99 (2d Cir . 2016)
("[T]his Court
27
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 27 of 88
often applies a ' hypothetical monopolist test [ .] ' ).
Pl aintiffs '
In
factors .
third proposed methodology is
Brown
Shoe ,
the
Court
the
endorsed
Brown
Shoe
considering
the
following factors when defining a product market :
"industry or
public recognition of the submarket as a separate economic entity ,
the product ' s peculiar characteristics and uses , unique production
facilities ,
price
distinct customers ,
changes ,
and
distinct prices ,
sensitiv i ty to
vendors."
U. S.
special ized
370
at
325.
Notably, the D. C . Circuit has observed that some of these factors
are
merely
" evidentiary
substitutability. "
proxies
for
direct
Rothery Storage , 792 F . 2d at 218.
court noted that while
proof
of
The Rothery
sensitivity to price changes ,
distinct
prices , and unique production facilities " relate directly to the
economic definition of the market," the other factors
require
inferential reasoning to draw economic conclusions and "may be
he l pful where the other indicia are ambiguous . "
Turning
to
Defendants'
arguments,
I d. at 2 1 8 n . 4.
the
court
finds
unpersuasive Defendants' contention t hat Plaintiffs must explain
in their complaint why certain Ais or crop-protection products are
excluded
from
the
markets.
To
the
extent
Defendants'
cases
demonstrate a burden on antitrust plaintiffs to explain a negative,
t h ey are either anoma l ous or distinguishabl e.
For exampl e ,
in
Bayer- Schering , 813 F. Supp . 2d 569 , the court appeared to apply
enhanced
scrutiny
to
the
alleged
product
market
because
28
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 28 of 88
the
counterclaimant amended its product market inconsistently with its
original
counterclaim.
Id.
at 576 - 77
pleadings counsel that this Court
counterclaims
in
ensuring
standards.") .
Through this lens ,
("Sandoz ' s
closely scrutinize the amended
that
they
meet
I d.
Rule
12 (b) (6)
the court analyzed particular
alternatives outside of the alleged market,
appears,
contradictory
many of which ,
it
the counterclaimant introduced into the record itself .
Wh atever caused the Bayer-Schering court to impose this burden
and analyze particular products, the Fourth Circuit has suggested
that such scrutiny is misguided on a motion to dismiss .
Kolon,
637 F . 3d at 442
fact-intensive
inquiry ,
See , e . g. ,
("Because market definition is a deepl y
courts
hesitate
to
grant
motions
to
dismiss for failure to plead a relevant product market." (quoting
Todd, 275 F.3d at 1 99-20 0 )).
Defendants'
other cases
fare no better .
For example ,
in
Therapearl, LLC v . Rapid Aid Limited, Civil No . 13- 2792 , 2014 WL
4794905 (D . Md. Sept. 25 , 20 1 4) , the court dismissed a Sherman Act
claim for failure to plead a produ ct market because the plaintiff
did not even attempt an exp l anation of why the market was l imited
and
"made
no
interchangeability.
allegations
concerning"
reasonable
In Global Discount Travel Services ,
LLC v.
Trans World Airl ines , Inc., 960 F. Supp. 702 , 706 (S . D.N.Y. 1997) ,
the court found the product market was improperly pleaded because
the plaintiff included only its brand in the product market and
29
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 29 of 88
made no plausibl e exp l anation as to why other competitors did not
suppl y interchangeable products.
Division for Yout h ,
And in Chapman v . New York State
546 F . 3d 230 , 238
(2 d Cir . 2008) ,
the court
found a product market too narrow where the plaintiff did not
provide "any theoretically reasonable explanation for restricting
the product market . "
Here ,
Plaintiffs have
included such an
explanation and include in the market products beyond just those
of Defendants (namely , t h e generics).
Moreover,
the
court
is
unpersuaded
that
taking
judicial
notice of the EPA label registrations and FTC and DOJ antitrust
matters would materially a l ter the court ' s anal ysis at this stage.
While the court ,
under Federal Rule of Evi dence 20 1,
may take
judicial notice of facts that are " matters of public record,"
Justice
360
v.
Stirling ,
42
F.4th
450,
455
(4th Cir .
2022) ,
Defendants ask the court to also accept their interpretation of
facts within the cited publ ic records .
be probative of interchangeability,
interchangeable
function ,
not
The EPA registrations may
but they appear to speak to
whether
and
how
these
crop
protection products are interchangeable in the marketpl ace - i.e.,
cross-elasticity of demand.
(finding
it
"immaterial "
In re Nexium, 968 F . Supp . 2d at 388
on
a
motion
to
dismiss
that
other
ph armaceuticals coul d be used to treat the same symptoms because
function does not necessarily speak to cross- elasticity of demand
among consumers) .
At a minimum, the EPA label registrations raise
30
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 30 of 88
fact
questions,
pleading
which are ill-suited for
stage .
And
whi le
the
prior
determination at
FTC
and
DOJ
the
antitrust
proceedings may suggest some inconsistency in how the government
views the crop-protection product market, the court must consider
each antitrust dispute on a case-by-case basis.
504 U. S .
at 467
Eastman Kodak,
(demonstrating preference to resolve antitrust
claims "on a case-by-case" basis);
(See Doc. 100 at 41-42 (citing
Ciba-Geigy Ltd . , 62 Fed. Reg. 409, 412 (FTC Jan. 3, 1997), because
FTC alleged in merger action a broader product market of "corn
herbicides") .)
As a result, even if the court took judicial notice
of these facts outside of the record, they woul d not materiall y
impact the court ' s analysis at this stage .
Defendants' other arguments fall short as well.
have
alleged plausible ,
albeit
narrow ,
product
Plaintiffs
markets .
The
reasoning applied in cases analyzing the relevant product market
for pharmaceuticals, specificall y that a p l ausible product market
may consist of a brand chemical and its generic alternative, is
instructive.
Zetia,
See In re Nexium, 968 F . Supp . 2d at 388 - 89; In re
2021 WL 6689718 at *19
consisting
of
Additionally ,
brand
drug
(finding proper a product market
and
generic
on
summary
judgment) .
Plaintiffs have plausibly al l eged facts that show
that there is limited cross-elasticity between the products inside
and
outside
of
Plaintiffs'
alleged
markets .
For
example,
Plaintiffs allege that Defendants' prices would fall significantly
31
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 31 of 88
upon entry of a generic of the same AI.
(See Doc. 149 <Jl.<Jl. 92 , 121 ,
127, 144, 150 , 158; Doc . 81 <Jl.<Jl. 101, 11 9 (demonstrating anticipated
market devaluation upon generic entry) . )
The alleged effect on
price result ing from generic entry plausibly suggests that the AI
i n each alleged product market does not already fac e substantial
competition from products outside the alleged market.
&
Hovenkamp,
supra
<JI
56lb2
(" [I] f
See Areeda
the price of one incumbent
product drops signi ficantly in response to new entry, while the
prices
of other
product,
plus
incumbents
the
new
do
not ,
then
that
is
very
likely
entrant ,
first
a
incumbent
market.").
Moreover, Defendants ' own alleged conduct, namely that Defendants '
own loyalty programs cover only individual Ais, plausibly suggests
that Defendants view the market as including only one AI b ut not
o t hers.
(Doc. 149
<Jl.<Jl.
67, 76); Todd,
275 F . 3d at 205
(crediting
evidence of defendant's conduct as suggestive of scope of product
market) .
Finall y,
Plaintiffs p lausibly allege characteristics
t hat make each AI unique in t he marketplace , that alternatives are
not considered by farmers as suitable ,
specific Ais.
and that farmers prefer
(Doc . 149 <Jl.<Jl. 46, 157 . )
In sum, Plaintiffs have alleged a plausible explanation as to
why the market should be limi ted as alleged .
at 442.
Cf. Kolon, 637 F.3d
Whether, as Defendants argue, they have the better of the
argument after the facts develop ,
must await another day .
and the evidence is weighed,
As a result, Defendants ' motion to dismiss
32
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 32 of 88
for fai l ure to plausibly al l ege a product market will be denied.
2.
Anticompetitive Conduct and Injury
Defendants argue that Plaintiffs have not plau sibly alleged
anticompetitive conduct and inj ury .
25.)
(Doc . 95 at 2 1 ; Doc . 100 at
The parties dispute first which legal test the court should
apply to Defendants '
loyalty programs, and second,
depend ing on
the test applied, whether Plaintiffs have alleged anticompetitive
conduct and i njury .
The
court considers each in turn for the
purposes of the instant motion .
a.
The Rule of Reason and Price-Cost Test
Defendants urge the court to apply the "price- cost" test,
argu ing that Plaintiffs failed to allege facts to survive this
measure of anticompetitive conduct.
22-23.)
(Doc. 95 at 24 ; Doc. 100 at
As suggested by its name , where the price-cost test is
applied, alleged condu ct may only be illegal if the price is set
bel ow the cost .
Brooke Grp. Ltd . v . Brown & Williamson Tobacco
Corp . ,
2 0 9,
50 9 U . S .
222
( 1993) .
Plaintiffs appear to concede
that the complaint does not allege prices below cos t.
(Doc. 150
at 43
("Pl aintiffs do not bring a predatory-pricing claim . ").)
This
concession
antitrust
claims
maintai n, however ,
would
seemingly
short-circuit
Plaintiffs'
if
price-cost
test
Plaintiffs
the
applies .
that the court would gravely err in apply i ng
the price- cost test , arguing instead t hat the cour t must apply the
defau lt "ru le of reason."
(Doc. 150 at 39-40 . )
Under that test ,
33
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 33 of 88
an exclusive dealing arrangement is unlawful only if its "probable
effect" is to substantially lessen competition in the relevant
market.
Tampa Elec., 365 U.S . at 327-29.
As a matter of principle, antitrust law is not intended to
prevent all price-cutting.
Brooke Grp . ,
509 U. S.
at 223
(" Low
prices benefit consumers regardless of how those prices are set,
and so
long as
t hreate n
they are
(quoting
competition."
Petroleum Co.,
above predatory levels,
495 U.S . 328, 340
Atl.
Richfield
(1990)).
they do not
Co.
In fact,
v.
USA
competitors
should generally be enabled to cut prices to a certain extent even to
increase market
antitrust laws .
share -
without running afoul of the
Id . ("The antitrust laws require no such perverse
result." (quoting Cargill, Inc. v. Monfort of Colorado, Inc., 479
U. S. 104, 116 (1986)).
generally
Low prices that are still above-cost are
procompetitive
because
"the
exclusionary
effect
of
prices above a relevant measure of cost [generally] reflects the
lower cost structure of the alleged predator, and so represents
competition on the merits."
On
the
other
hand,
Id . at 222 - 24.
predatory pricing
harms
competition.
Predatory pricing occurs where a company sets prices below cost to
eliminate competitors in the short run and reduce competition in
t he long run.
Cargill, 479 U.S. at 117.
Such a pricing scheme is
"rarely tried, and even more rarely successful."
Matsushita Elec .
Indus. Co. v. Zenith Radio Corp . , 475 U.S. 574 , 589 (1986).
"For
34
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 34 of 88
such a scheme to make economic sense ,
l osses
suffered
during
supracompetitive phase . "
Weyerhaeuser Co.
v.
the
the firm must recoup the
below-cost
ZF Meritor,
phase
in
696 F . 3d at 272
Ross-Simmons Hardwood Lumber Co.,
the
(citing
54 9 U.S.
312, 318 (2007)).
To separate the competitive wheat from the predatory chaff,
the Supreme Court devised the price-cost test: to succeed on a
predatory pricing claim, a plaintiff must demonstrate
(1)
"that
the prices complained of are below an appropriate measure of [the
defendant's] costs"; and (2) that the defendant had "a dangerous
probability
prices."
of
Id .
recouping
its
investment
(quoting Brooke Grp .,
509 U. S .
in
below-cost
at 222-24) .
In
fashioning this formalistic approach, the Court acknowledged that
the price-cost
test will miss
some
anticompetitive
above-cost
pricing , but that it "is beyond the practical ability of a judicial
tribunal"
to
ascertain
whether
above-cost
pricing
is
anticompetitive "without courting intolerable risks of chilling
legitimate price- cutting."
Id. at 273.
Where the price-cost test does not apply, courts apply the
rule of reason to exclusive dealing arrangements . 7
Tampa Elec . ,
7
The ZF Merit or court indicat ed that t he price-cos t t est is a "specific
applicat ion of t he rule o f reason" when applied in the cont ext of
exclusive dealing.
ZF Meritor, 696 F.3d at 273; see also In re EpiPen
(Epi nephrine Injection, USP) Ant i t rust Lit ig., 44 F.4 t h 959, 983 n.7
(10th Cir. 2022) (quot ing ZF Merit or's "specific application" language
and referring to the Tampa Electric analysis as the ''full rule of reason
35
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 35 of 88
365 U.S. at 327.
"[E ] xcl usive dealing arrangements violate the
antitrust laws only if they are likely to foreclose the entry in to
a substantial part of the market of products that compete with the
products
benefitting
from
the
exclusive
dealing
arrangement."
Chuck's Feed, 810 F.2d at 1293 (citing Standard Oil Co. v. United
States, 337 U.S . 293, 314 (1949)) .
following
considerations
when
The Supreme Court set out the
analyzing
an
exclusive
dealing
arrangement:
[T] he probable effect of the contract on the relevant
area of effective competition, taking into account the
relative strength of the parties, the proportionate
volume of commerce involved in relation to the total
volume of commerce in the relevant market area, and the
probable immediate and future effects which pre-emption
of that share of the market might have on effective
competition therein .
Tampa Elec . ,
365 U. S. at 329.
The concern of t he courts about
exclusive dealing arrangements is "the possibility that a single
manufacturer will control all or a
substantial number" of the
available options for a certain kind of product in a specified
geographical area.
Chuck's Feed,
810 F.2d at 1293
(addressing
concern in the context of retail markets)
To succeed on an exclusive dealing claim, a plaintiff must
analysis") ; UniStrip Techs. , LLC v. LifeScan, Inc., 153 F. Supp. 3d 728,
736 (det ermining whether to apply the "'price cos t t est' or the 'rule
of reason'"); In re Surescripts Antitrust Litig ., 608 F. Supp . 2d 629,
636 (N.D. Ill . 2022) (describing the "apt test" as the " rule of reason,"
as opposed to the "price-cost test"); cf. Atl . Richfield, 495 U.S . at
342 ("Per se and rule-of-reason analysis are but two methods of
determining whether a restraint is "unreasonable," i .e . , whether its
anticompetitive effects outweigh its procompetitive effects . ").
36
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 36 of 88
prove (1) the rel evant product market ;
(2) the geographical area
of competi t ion for the product market ; and (3 ) that the arrangement
at issu e extends to a " substantial share of the relevant market . "
Id.
(citing Tampa Elec .,
substan tial
foreclosure,
365 U.S .
327-28).
it
still
must
If a
court finds
consider
"whether
an
otherwise unacceptable level of market foreclos u re is justified by
procompetitive efficiencies . "
Id . at 1294
(citing Cont ' l
T.V .,
I nc. v. GTE Sylvania , I nc ., 433 U. S. 36, 57-58 (1 977); Arizona v.
Maricopa Cnty . Med . Soc ' y , 457 U. S . 332 , 343 (1 982) ) .
Substantial
foreclosure has been found " even though the contracts foreclose[d]
l ess than [a) roughly 40% or 50% share."
Microsoft, 253 F . 3d at
70 (Sherman Act§ 2 claim).
The Supreme Court's price- cost line of cases demonstrates
that the price-cost test applies at least where a pricing practice
itself operates as the e x clusionary tool ,
plaintiff
styles
i ts
allegations .
In
regardless of how the
Pacific Bell
Telephone
Company v. Linkline Communications , Incorporated, for example, the
defendant , which sold input s at wholesale and finished goods at
retai l , allegedly drove competitors out of the market by raising
the
wholesale
price.
price
simultaneously
555 U. S . 438 , 457 (2 009) .
" price-squeezing"
scheme
while
was
claim
permissible
remain[ed] above cost . "
lowering
the
retail
The Supreme Court analyzed this
under
Brooke
because
"the
Id. at 451-52.
Group,
holding
defendant' s
that
ret ail
the
price
In Cargill , Incorporated
37
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 37 of 88
v. Monfort of Colorado, Incorporated, the Supreme Court rejected
a
plaintiff's
theory
of
antitrust
injury where
the
plaintiff
alleged that the defendant's merger would lead to reduced prices
that were still at or above cost.
479 U.S. at 114-16.
And in
Atlantic Richfield Company v. USA Petroleum Company, the plaintiff
alleged that the defendant, a gasoline manufacturer, had engaged
in price-fixing by offering its dealers discounts and rebates to
stave off competition from independent dealers.
32 .
495 U.S. at 331-
The Supreme Court held that where a firm or group of firms
lowers prices through a vertical agreement, but maintains prices
above cost, competitors ' losses are attributable to procompetitive
forces , not anticompetitive predatory pricing .
Id. at 337-38 .
Lower courts have nevertheless grappled with the question of
when to apply the price-cost test when it is not clear that a
company engages merely in "price- cutting" - e.g . , when a company
offers discounts in exchange for purchasing a certain percentage
of goods from that company .
To be sure, courts have in some cases
applied the test to above- cost discounting in such instances .
For
example, in NicSand Incorporated v . 3M Company, two suppliers of
automotive
sandpaper
competed
for
business
with
retailers that controlled 80% of the retail market .
447 (6th Cir . 2007).
six
large
507 F.3d 442,
Five out of the six retailers sold only one
brand at a time, meaning each retailer sold only either NicSand or
3M, but not both .
Id.
In order to obtain that exclusive shelf38
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 38 of 88
space ,
NicSand or 3M had to offer a favorable price and meet a
number of additional terms,
such as providing a
fu ll
line of
automotive sandpaper and providing the racks for the shelves.
at 448.
Id.
For years , NicSand dominated the shelves in four of the
five retailers that insisted on single-brand shelves.
That is,
until 3M offered retailers up-front payments worth hundreds of
thousands of dollars in exchange for switching to 3M.
Id.
The
Sixth Circuit applied the price-cost test in rejecting NicSand ' s
claim.
In doing so ,
the court reasoned that exclusivity was an
essential
feature
of
this
specific
retai l ers
(i.e. ,
the
buyers)
retail
required
market
because
exclusivity,
and
the
that
NicSand, as the market incumbent , could not now complain that 3M
had knocked it from its perch using similar exclusive terms it had
previously utilized.
Id. at 456
("When one exclusive dealer is
replaced by another exclusive dealer , the victim of the competition
does not state an antitrust injury. " ).
Ul timate l y, the court found
that the up-front payments 3M offered were a pricing measure that
the re t ailers "insisted on receiving" in order to switch suppliers .
Id. at 453.
The Eighth Circuit, in Concord Boat Co rporation v . Brunswick
Corporation , 207 F.3d 1039 (8th Cir . 2000), applied the price-cost
test to the plaintiffs' Sherman § 2 claim and the rule of reason
to the plaintiffs ' Sherman§ 1 claim, albeit with little discussion
as
to why the cou rt applied different tests
to
the different
39
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 39 of 88
claims.
The defendant, Brunswick, offered market-share discounts
to boat builders and dealers in order to increase the sales of its
engines .
Id . at 1044.
From 1995 to 1997, Brunswick offered a 3%
discount
if
purchased
a
buyer
70%
of
its
engines
from
the
defendant, a 2% discount for 65% of its engines, and a 1% discount
for 60% of its engines.
Brunswick also offered additional
Id .
discounts to anyone who signed a multi-year market-share agreement
and to t hose who purchased a higher volume of engines
volume discount) .
Id.
(i.e., a
Analyzing the plaintiffs' section 1 claim
under the rule of reason because the plaintiffs did not allege
activity that would "trigger a per se analysis," the Eight Circuit
held that the plaintiffs
failed to establish that Brunswick's
discount program was anticompetitive exclusive dealing because
boat builders were not required to commit for a specified time
period and many had switched to other sellers when offered superior
discounts.
Id. at 1058-59.
plaintiffs
did
not
show
Moreover, the court held that the
that
"significant
barriers
to
entry
existed" in the market because firms had little difficulty entering
t he market.
Id.
Then, applying the price-cost test to plaintiffs '
section 2 claim, the court held that Brunswick's loyalty program
was a "normal competitive tool" because its prices remained above
variable cost.
justify this
Id. at 1062.
holding,
the
Though not apparently necessary to
court
reiterated that
t he
discount
program was not exclusive dealing, that the boat builders could
40
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 40 of 88
walk away at any time (and did so), and that there were low barriers
to entry.
Id. at 1063.
Equipped with
these
precedents,
t he
Third Circuit
in
ZF
Meritor dealt more explicitly with which of the two tests to apply
when presented with another loyalty discount program.
In that
case, the defendant, Eaton, had about an 80% market share in the
manufacture
of
heavy-duty
truck
transmissions
and
introduced
loyal ty contracts t hat provided both upfront payments and rebates
to
four
major
truck
transmissions .
manufacturers
ZF Meritor,
t ha t
696 F.3d at 265,
purchased
truck
286 n.5.
These
contracts lasted for at leas t five years and would scale discounts
based on the percentage of goods the manufacturers purchased from
the defendant.
Id. at 265.
ranged from 85% to 95%.
beyond
the
Generally, the market-share targets
Eaton included additional terms
Id .
discounts.
Notably,
Eaton
retained
the
right
to
termi nate the agreements if the market share figures were not met,
and if the manufacturers did not meet the market-share figure for
one
year,
savings."
Eaton
could
require
Id.
Moreover,
"repayment
all
contractual
direct-from-manufacturer truck buyers
could customize certai n equipment,
including transmissi ons,
could browse options in the manufacturers'
agreements required t hat
of
its
catalogues.
transmissions be
and
Eaton's
fea tured as
the
standard offering in the catalogues and even required the removal
of
competitors'
products
in
two
of
the
four
manufacturers'
41
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 41 of 88
catalogues.
Id.
Further,
the manufacturers were contractually
required to price competitors' products above those of Eaton.
Id.
at 265-66.
The ZF Meritor court weighed whether to apply the price-cost
test or the rule of reason to Eaton's agreements.
Id . at 268.
The court noted that the price-cost test "would control if this
case presented solely a challenge to Eaton's pricing practices."
Id.
at
273-74.
However,
the
court
credited
testimony
that
demonstrated that manufacturers were forced to meet the market
share targets , or else risk financial penalties, supply shortages ,
or severed ties with t he market-dominant defendant entirely.
at 277.
Because Eaton was
a
monopolist,
Id.
the court reasoned,
forgoing the rebates and "losing Eaton as a supplier was not an
optio n."
The
Id. at 278.
court
defendant's
stated that
low price was
"this
is not a
the clear driving
customer's compliance with purchase targets,
case
in which the
force
behind the
and the customers
were free to walk away if a competitor offered a better price ."
Id.
(citing Concord Boat, 207 F.3d at 1063 as a counter-analogy).
Put another way, Eaton ' s de facto exclusive dealing arrangements
drove out other firms "not because they cannot compete on a price
basis, b ut because they are never given an opportunity to compete,
despite their ability to offer products with significant customer
demand."
Id . at 281 .
The court held that when price itself is
42
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 42 of 88
not the "clearly predominant mechanism of exclusion ," the priceId. at 277. 8
cost test does no t app l y.
A few years later , the Third Circuit revisited ZF Meritor in
the pharmaceutical context .
Eisai, Inc . v. Sanofi Aventis U.S.,
LLC ,
821 F . 3d 394
(3d Cir. 2016) .
In that case, Eisai alleged
that
Sanofi Aventis engaged i n three modes of anticompetitive
conduct in the market for anticoagulant drugs in U.S. hospitals:
" ( 1)
market-share
and
volume
discounts,
( 2)
a
restrictive
formulary access clause, and (3) aggressive sales tactics used to
market the program."
Id. at 400.
Specifically, Sanofi offered a
baseline 1% discount for a market-share below 75% and a scaled
discount from 9% to 30% for market-shares above 75% .
Id .
The
court ultimately held that Sanofi ' s program was distinguishable
from that in ZF Meritor because the discounts were not de facto
mandatory , did not threaten repayment of contractual savings , and
did no t t hreate n refusa l t o dea l in t he future.
Id. at 406.
The
cou rt nevertheless refrained from commenting on whether the price-
8
In dissent , Judge Greenberg disagreed wit h t he majority 's view that
the agreement s were exc l usive dealing and inst ead would have applied the
price-cost
t est.
ZF Meritor ,
696 F.3d a t
349 (Greenberg , J .,
dissent ing).
He
principally
d isagreed
wi t h
the
majorit y's
characterization of Eaton's conduct as coercive, as he viewed the
agreements as neither exclusive nor mandatory and contended t hat there
was no evidence " t hat Eaton would have refused to supply t ransmissions
to the [manufacture rs]u if they failed t o meet t he market share targets.
Id . at 312 . Moreover, Judge Greenberg took the position t hat the price
cos t test should apply in a situation such as this because the agreements
themselves - with or without non-price f eatures - woul d not exist
"without the reduced prices that Eaton offeredu as an incentive to enter
the agreement in the first p lace . Id . at 321 .
43
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 43 of 88
cost test applied because,
applied
in
ZF Meri tor,
even under the rule of reason test
the p laintiff 's
claims
insufficient evidence of market foreclosure.
failed
due
to
Id. at 408-09 .
The Thi rd Circuit's approach suggests that loyalty discount
arrangements may be pure (or nearly pure) pricing schema, and in
such situations, the price-cost test applies neatly .
NicSand,
other
507 F.3d at 453.
allegedly
coercive
However,
See, e . g . ,
an arrangement may include
mechanisms
that
impose
costs
on
competitors to enter the market such that price is not "clearly"
doing
the
work
formulation,
of
exclusion.
Following
the
Third Circuit 's
other circuits have since relied upon and cited ZF
Meritor where the defendant offers loyalty discounts.
See, e.g . ,
In re EpiPen (Epinephrine Injection, USP) Antitrust Litig., 545 F.
Supp.
3d 922,
1016-17
(D.
Kan.
2021)
(explicitly applying the
"clearly predominant mechanism of exclusion" analysis), aff'd , 44
F.4th 959 (10th Cir. 2022)
(observing that ZF Meritor and other
Third Circuit precedent "merit close consideration in this case");
McWane, 783 F.3d at 835
(citing ZF Meritor to just ify a rule of
reason approach to exclusive dealing cases); Aerotec Int 'l, Inc.
v . Honeywell Int'l, Inc . , 836 F . 3d 11 7 1, 1182-83 (9th Cir. 2016)
(citing ZF Meritor as a counter-analogy for situation with " extra
contractual conditions,
or preferential treatment terms");
see
also Dial Corp . v. News Corp., 165 F . Supp. 3d 25, 32 (S.D.N.Y.
2016)
(citing
and
applying
ZF
Meritor's
"clearly
predominant
44
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 44 of 88
method
of
exclusion"
test
in
non-loyalty
discount
exclusive
dealing case) .
ZF Meri to r
Supreme
Court
appears
has
to balance the important concerns
identified
in
over-regulating
the
price-cutting
schema, see Matsushita , 475 U.S . at 594 ("[M]istaken inferences in
[pricing cases]
chill
the
very
cases
conduct
are especially costly, because they
the
antitrust
l aws
are
designed
to
protect."), and under-regulating exclusive dealing, see Jefferson
Par., 466 U.S . at 45 (O'Connor, J. , concurring) ("Exclusive dealing
can have adverse economic consequences by allowing one supplier of
goods or services unreasonably to deprive other suppliers of a
market for their goods [.] ") .
The ZF Meri tor approach counsels
applying the price-cost test where a pricing practice is clearly
doing the work of exclusion and the rule of reason where there are
mechanisms
beyond
price-cutting
that
exclude
competition
by
imposing unilateral costs on competitors.
The parties do not appear to disagree with the above analysis.
(Doc. 100 at 25; Doc. 95 at 24-25; Doc. 150 at 41 .)
Rather, they
depart on whether price clearly predominates over other mechanisms
of exclusion in this case.
Syngenta argues that Plaintiffs do not
plead " any of the non-price coercive features that courts have
required"
before
anticompetitive.
finding
market-share
a
(Doc . 100 at 27 .)
rebate
program
Furt her , Syngenta argues, the
single-year and single-product scope of the
rebates
undermines
45
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 45 of 88
Plaintiffs '
claim that price clearly predominates.
Syngenta dismisses Plaintiffs'
distributor
as
an
"isolated
(Id. at 29.)
allegation that it terminated a
allegation"
probative of the program itself."
that
is
"simply
not
(Id. at 30 (emphasis removed) .)
Finally, Syngenta characterizes Plaintiffs' allegations regarding
Defendants' agreement whereby Syngenta supplies mesotrione ands
metolachlor for Corteva's use as an "effort to muddy the waters."
(Id. at 32.)
Corteva first argues that "Plaintiffs' allegations make clear
that price is the primary means of exclusion, but do not allege
that Corteva's programs fail the price-cost test."
25.)
(Doc. 95 at
Corteva specifically contends that Plaintiffs do not allege
long-term
contract
noncompliance,
terms
which
are
or
exclusions
recognized
from
supply
non-price
would trigger the default rule of reason.
based
conditions
(Id . at 26.)
on
that
Second,
Corteva claims that its term that defers a certain percentage of
rebates
into subsequent years
and retracts
unpaid rebates
for
noncompliance is "no more than a 'threat of a lost discount'" that
is, in its view, not anticompetitive.
(Doc . 98 at 26.)
Third, Corteva claims that conditioning the Corporate Offer
on compliance with the CRPIVM is not anticompetitive "bundling."
(Id. at 27-28.)
goods
Bundling occurs "when a firm sells a bundle of
. for a lower price than the seller charges for t he goods
purchased
individually ."
Cascade
Health
Sols .
46
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 46 of 88
v.
PeaceHealth , 515 F . 3d 883 , 894 (9th Cir . 2008).
the
Corporate
Offer
"just
offers
an
In Corteva' s view,
additional
discount
to
Corteva's customers who do buy products covered by the [Corporate
Offer ] ."
"should
(Doc. 95 at 28 . )
not
nonspecific
credit
Fourth, Corteva contends that the court
[P]laintiffs '
allegations
that
unsupported ,
' Defendants
have
conclusory
and
retaliated
and
threatened to retaliate ' against distributors that have failed to
satisfy
l oyal ty
by
cance ll ing
distribution
contracts
or
withholding access to supply."
Plaintiffs argue in response that Defendants mischaracterize
their own discount program as a pricing scheme.
(Doc . 150 at 35.)
Plaintiffs point to the complaint ' s allegations that "Defendants
have
' threatened
distributors .
to
retaliate
against
[disloyal]
by canceling distribution contracts , de l aying
access to new products , or withholding product allocation during
a supply shortage. "
(Id . at 36 (citing Doc. 149 <I[ 88).)
Pl aintiffs
further maintain that they allege that each Defendant "follow [ed]
through"
on
their
threats
by
refusing
to
sell
pesticides
9
or
Corteva argues that this litigation was filed well over fou r years
after the loyalty programs were allegedly put in place, outside the four
year statute of limitations provided for in t he Sherman Act and Clayton
Act .
(Doc . 95 at 29 - 30.)
In its briefing on i t s motion to dismiss t h e
original complaint, Corteva argued t hat those claims therefore "long ago
expired . "
(Doc. 70 at 23-24 . ) Though Corteva does not claim that now,
and while Plaintiffs responded to Corteva ' s suggestion by noting, among
other bases, the continuing violation doctrine , (Doc . 150 at 67-68), the
court concludes that the issue is not fairly raised in Corteva ' s brief
and therefore does not consider i t .
47
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 47 of 88
limiting sales of an insecticide to two distributors.
at 36 (citing Doc. 81 1 88) .)
(Doc. 112
Plaintiffs respond to Defendants'
argument - that t hese are isolated incidents t hat do not exemplify
the program - by arguing that the reasonable inference which must
be
drawn
in
Plaintiffs'
favor
i ns tances
of
retaliation
are
working as intended.
(Id.
at
this
evidence
stage
is
of
loyalty program
at 37-38.)
the
that
limited
Plaintiffs also contend
that the one-year length of the agreements triggers no presumption
that the contracts are lawful and that looking to the practical
effect of agreements demonstrates " long-term foreclosure. "
at 38-39.)
(Id.
Plaintiffs finally argue that even if the price-cost
test applies to the Sherman Act and Clayton Act claims, it does
not apply to the FTC Act claim.
(Id. at 45- 47.)
In other loyalty discount cases, courts have observed a number
of
non - price
mechanisms
of
exclusion ,
such
as
provisions
aggravating existing barriers to enter the market , McWane, Inc.,
783 F.3d at 836; In re Surescripts Antitrust Litig ., 608 F . Supp.
3d
629 ,
645
exclusive
(N . D.
dealing,
Ill.
NicSand,
obligations to purchase a
defendant ,
2022) ;
whether
507
F. 3d
the
buyer
insists
at
456;
contractual
set percentage of products
Allied Orthopedic,
592
F.3d at
997
n .2;
on
from the
discounts
involving tying or bundling, Eisai , 821 F.3d at 405; LePage's, 324
F . 3d at 157 - 58 ;
t hreats to retract unpaid rebates or claw back
discounts from prior years, McWane, 783 F.3d at 820-21; threats to
48
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 48 of 88
cut off supply from a monopolist ,
ZF Meri tor ,
696 F. 3d at 27 8 ;
requirements to exclude competitors from marketing materials, id .;
and the length of time of the discounting agreements, McWane, 783
F.3d at 820-21.
While these cases are instructive, each antitrust
case "must be determined upon the particular facts disclosed by
the record, and . . . the opinions in those cases must be read in
t he
light
of
their
facts
and of
a
clear
recognition
of
the
essential differences in the fac ts of those cases, and in the facts
of any new case to which the rule of earlier decisions is to be
applied."
Maple Flooring Mfrs. Ass'n v. United States, 268 U.S.
563 , 579 (1925).
Here, Plaintiffs have alleged sufficient non-price mechanisms
of exclusion to foreclose application of the price - cost test as a
matter
of
law at
this
plausibly
alleges
that
Defendants '
monopolist
pleading
stage.
First,
the
loyalty
programs
status
and
t he
the
leverage
market's
barriers to entry to exclude competition for the Ais.
<J[
160.)
lega l
Among the alleged "capital,
barriers"
are
"obtaining
technical,
registration
complaint
the
substantial
(Doc. 14 9
regulatory and
from
the
EPA,
developing manufacturing processes and sourcing active ingredient,
and paying data compensation costs to the initial active ingredient
registrant."
While high entry barriers
alone may not
trigger the rule of reason, Plaintiffs have plausibly alleged that
Defendants' use o f the loyalty discounts - as alleged monopolists
49
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 49 of 88
relating to production of the Ais - exacerbates the already high
costs
to
enter
the
market by locking up
efficient channel of dist ribution .
access
to
the
most
See McWane , 783 F.3d at 836;
ZF Meritor , 696 F . 3d at 284-85 (app l ying rule of reason where high
barriers e x isted in high-concentration market ) ; Eastman Kodak, 504
U. S.
at
488 (Scalia,
J.,
("Behavior
dissenting)
that
might
otherwise not be of concern to the antitrust laws . . . can take
on exclusionary connotations when practiced by a monopo l ist.")
Second,
the
complaint
alleges
threatened to cut off supply,
not
only
that
Defendants
but that each Defendant followed
through on that threat, a l beit in l imited instances.
':II 8 8. )
(Doc. 1 49
While Defendants contend that these do not exemplify the
program,
the
court
must
draw
Plaintiffs' favor at this stage.
all
reasonable
inferences
in
Such instances plausibly support
the claim that Defendants' threats to restrict supply are effective
deterrence against non- compliance.
(See i d . ':II 84
(alleging that
Defendants
to
thresholds
communicate
distributors) . )
to
restrict
adherence
loyalty
to
The complaint plausibly alleges that the threats
suppl y
factors
into
distributors '
purchasing
decisions .
Third,
whi l e
the l e ngth of the agreements is facia l ly one
year, the alleged yearl y renewals and threat of retaliat i on are
claimed t o have a longer- term effect.
(Id .
':11':ll
164 , 172 . )
Further,
Corteva ' s agreements allegedly contain terms that defer payments
50
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 50 of 88
into subsequent years and require forfeiture of unpaid discounts
for non-compliance.
Fourth,
(Doc. 81
Corteva' s
<_![
78.)
agreements allegedly share some features
with bundling because Corteva offers terms that link discounts for
any one AI to compliance with the loyalty threshold fo r all Aisin
a distributor's offer and that link discounts under the Corporate
Offer to compliance with the CPRIVM offer.
Finally,
Plaintiffs
plausibly
allege
(Id.
<_![
that
79.)
the
Syngenta
Corteva supply agreement for mesotrione and metolachlor allegedly
enhances the exclusive effect of the loyalty programs.
<_j[<_j[
(Doc. 149
109, 122.)
Whether these non-price mechanisms have the alleged exclusive
effect vis-a-vis
record.
price will
depend on the development of the
In light of these plausible allegations, Defendants have
not demonstrated at this stage that price clearly predominates
over non-price mechanisms of exclusion.
Defendants'
other
arguments
do
not
alter
this
analysis.
First, that t he loyalty discounts cover a single product
(i.e.,
each individual AI) does not necessarily mean that price clearly
predominates .
While Defendants cite to ZF Meritor and Eisai for
this proposition, neither supports it .
In ZF Meritor, the Thi rd
Circuit did state, "we join our sister circuits in holdi ng that
the price- cost test applies to market-share or volume rebates
offered by suppliers within a single-product market."
ZF Meritor,
51
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 51 of 88
696 F.3d at 274 n.11
(citing NicSand,
507 F . 3d at 452 ; Concord
Boat , 207 F.3d at 1061 ; Barry Wright , 724 F . 2d at 236) .
In making
this observation , the Third Circuit was distinguishing LePage's v.
3M, 324 F . 3d 131 (3d Cir. 20 03 ), where the court did not apply the
price-cost test because the alleged conduct involved "bundling"
across multiple products .
Id .
The court reasoned that LePage's
should not extend to the facts of ZF Meritor ,
product
is
at
issue
and
allegations of bundling . "
the
p l ainti f fs
ZF Meritor,
where "only one
have
not
made
any
696 F . 3d at 274 n . 11.
Though the court stated that the price-cost test " applies " to a
single-product discount, the ZF Meritor court itself applied the
rule of reason discount.
not the price-cost test -
to a single-product
This indicates that the price- cost test can apply where
there is a single-product market , not that it must .
reliance on Eisai fares no better ,
that
pricing
" usually"
Defendants'
as the Third Circuit stated
predominates
over
other
means
of
exclusivity when "a firm uses a single-product loyalty discount or
rebate to compete wi t h s.imilar products . "
Eisai , 821 F . 3d at 409 .
However, the court ultimately refrained from applying t he price
c o st test because the plaintiff's claim failed under Tampa Electric
as well .
claims
Id .
are
at 409
("Because we have concluded that Eisai ' s
not
substantiated
a rule of reason analysis,
and
that
they
fai l
we will not opine on when ,
if ever,
the price-cost test applies to this type of claim . ") .
Notably ,
52
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 52 of 88
neither ZF Meritor nor Eisai was decided at the pleadings stage
but after the development of a factual record.
ZF Meritor was
decided on post-trial motion , and Eisai was decided on motion for
summary judgment.
Though the price-cost test may apply to certain
loyalty
programs ,
discount
the
Supreme
Court
admonishes
that
"[l]egal presumptions that rest on formalistic distinctions rather
t han actual market reali ties " are "generally disfavored" and that
courts should resolve anti trust cases on a
"focusing on the
Eastman Kodak ,
'particular facts
504 U.S .
at 466-67
case-by-case basis,
disclosed by the
record.'"
(quoting Maple Flooring,
268
U.S . at 579 ).
Second, at least at this early stage, it is not clear that
the single- year term of the loyalty discount agreements mandates
application of t he price-cost test as a matter of law.
Defendants
contend that the single- year term of their agreements in t his case
"are presumptivel y incapable of harming competition."
at 29 .)
While long-term exclusive dea ling has been found to factor
in favor o f finding anticompetitive injury,
at
(Doc. 100
286-87,
Defendants
have
not
ZF Meritor, 696 F.3d
demonstrated
t hat
a ny
such
presumption exists .
Rather,
t he cases Defendants cite for this
position
courts
have
show
determining
that
anticompetitive
anticompetitive effects.
weighed
effects,
not
short
presumed
duration
a
lack
in
of
See R.J. Reynolds Tobacco Co. v . Philip
Morris Inc ., 199 F . Supp . 2d 362, 391-93 (M.D.N.C 2002) , aff'd sub
53
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 53 of 88
nom. RJ Reynolds Tobacco Co. v.
App'x
810
(4th Cir.
2003)
Philip Morris USA,
(unpublished)
Inc.,
67 F.
(considering contract
length along with percentage of foreclos ure and costs of switching
to other vendors); see also In re EpiPen Mktg., 44 F.4th at 988
(" It
is
axiomatic
that
short,
easily
terminable
exclusive
agreements are of little antitrust concern; a competitor can simply
wait
for
the
contracts
to
expire
or make
alluring
offers
to
initiate termination." (collecting cases)); Allied Orthopedic, 592
F . 3d at 997
("The
'easy terminabili ty'
of an exclusive dealing
arrangement 'negate [s ] substantially [its] potential t o foreclose
competition.'" (quo t ing Omega Env't, Inc. v. Gilbarco, Inc., 127
F.3d 1157,
1163-64
(9th Cir .
1997))).
Here,
Plaintiffs allege
that Defendants' renewable single- year contracts create long-term
competitive harms, including cutting off supply and, in Corteva's
case,
deferring
rebates
into
subsequent
years
further compliance with meeting market-share.
F.3d at 193-94
conditioned
on
See Dentsply ,
399
(finding "strong economic incentive to continue"
compliance with market-share agreement despite "legal
which the relationship can be terminated"); McWane,
833-34
(finding
anticompetitive
injury
dealing was "short-term and voluntary").
even
ease with
783 F .3d at
though
exclusive
Moreover, each of the
Ais has been in a loyalty program for at least four years, and one
has been included for almost two decades.
115, 127, 137, 146.)
(Doc. 149
<J[<J[
93, 102,
While the annual length of the agreements is
54
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 54 of 88
generall y a factor that favors Defendants , the court must draw a l l
reasonabl e
inferences
from
the
compl aint ' s
Plaintiffs ' favor at this early stage .
a llegations
in
As such , the court cannot
say that the length of the agreements requires a finding at this
time that price clearly predominates over other alleged non-price
mechanisms of exclusion .
In sum, Pl aintiffs have plausibly alleged suffic i ent facts ,
if believed,
for
the court to concl ude
that price is not
clearly predominant mechanism of exclusion .
the
The complaint alleges
that Defendants are dominant suppliers who have entered into de
facto
exclusive
deal ing
arrangements
t h at
include
significant
mechanisms
Accordingly,
the court cannot conclude at this stage that the
of
beyond
plausibl y
exclusion
price-cost test must apply as a matter of law.
price-cutting .
Indeed, Defendants'
cited cases demonstrate that courts have reached , or even closely
considered,
such
circumstances.
to
dismiss
trial);
tria l
plaintiff
207 F . 3d 1039
ZF Meritor,
after
conclusion
before
discovery
in
only
rare
NicSand, 507 F . 3d 442 (price-cost applied on motion
where
Concord Boat,
a
did
have
antit r u st
standing) ;
(price-cost partially applied post
696 F . 3d 254
extensive
not
(rule of reason applied post
discussion) ;
(dismissing price- squeezing c l aim,
Pac .
Bell ,
555
U. S .
438
not excl usive d ealing c l aim).
Depending on the facts addu ced at a later stage, it remains to be
seen whether the price-cost test or Tampa Electric' s rule of reason
55
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 55 of 88
and its progeny will ultimately be the proper test for Plaintiffs '
claims.
For purposes of the pending motions, therefore, the court
turns to Defendants' contention that the complaint fails under the
rule of reason.
b.
Defendants
Allegations
Injury
argue
that
of
Anticompetitive
Plaintiffs
anticompetitive conduct and injury .
have
failed
Conduct
to
and
al l ege
Corteva contends that it is
" entirely dispositive" that Plaintiffs have not pled any actual
exclusivity because the loyalty programs are voluntary,
cover all distributors in the market,
exclusivity.
that
any
(Doc.
market
95 at 22-23 . )
foreclosure
is
do not
and do not require 100%
Syngenta principal ly argues
the
result
of
"lawful
price
competition," that Syngenta incentivized customers to "buy more of
its products by lowering its prices," and that there is an absence
of non-price mechanisms of exclusion present in other cases like
ZF Meritor and Dentsply.
(Doc. 100 at 33-35 . )
Syngenta further
argues that Plaintiffs failed to explain why generic competitors
do not lower their prices to make their products more profitable
to distributors.
(Id. at 35.)
Finally, Syngenta claims that its
exclusive dealing arrangement with Corteva is evidence of legal
competitive conduct.
Plaintiffs
(Id . at 36-37.)
respond
that
they have plausibly alleged both
indirect and direct evidence of harm to competition.
(Doc. 150 at
56
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 56 of 88
26.)
On the indirect side ,
Plaintiffs contend that they have
a lleged foreclosure of a " substantial part of the market."
(citing Chuck's Feed, 810 F . 2d at 1293-95) .)
contend
that
Defendants
have
Doc. 81
<JI
171) . )
Sp ecifically, they
foreclosed
"approximately 70% or more" of the market.
(Id.
generics
from
(Doc . 112 at 27 (citing
Plaintiffs further argue that this estimate is
likely conservative because it relies on the lowest market-share
thres hold available and conservatively assumes that distributors
only narrowly hit the market-share threshold .
(Doc . 150 at 27 . )
On the direct side , Plaintiffs argue that they have alleged three
competitive harms : reduced choices for farmers , higher prices for
farmers ,
and less innovation .
contend
that
Defendants '
(Id . at 28 . )
discounts
may
Plaintiffs further
benefit
distributors but do not get passed on to farmers.
participating
(Id. at 35 . )
As an initial matter , Defendants ask the court to apply the
same mode of inquiry , i.e. , the ru l e of reason or price-cost test
- regardless of the antitrust statute at issue .
13.)
(Doc . 157 at 33 : 7-
Indeed, courts have conducted the exclusive dealing inquiry
in such a manner.
See ,
e.g.,
ZF Meritor,
696 F.3d at 269 n . 9
(stating that the r u le of reason is applicable to the plaintiff ' s
claims under Sections 1 and 2 of the Sherman Act and Section 3 of
t h e Cl ayton Act);
Microsoft,
253 F. 3d at 59
reason to Sherman Sections 1 and 2) ;
1294
(appl ying ru l e
Chuck' s Feed,
of
810 F. 3d at
(appl ying rule of reason to exclusive dealing under the FTC
57
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 57 of 88
Act and Clayton Section 3).
Moreover, Defendants do not argue that Plainti ffs ' c l aims may
survive under some antitru st statu tes b u t not others , at least at
this stage.
the
Here , the relevant threshold requirements specific to
statutes
are Sherman Section 1 ' s
contract requirement ,
15
U. S.C. § 1 ("Every contract . . . "), Sherman Section 2 ' s monopoly
power
requirement ,
15
U. S . C.
§
2
( " Every
person
who
shall
monopolize . . . "), and Clayton Secti on 3 ' s conditional discount
or rebate requirement,
15 U. S . C.
§
1 4 (".
. discount from,
rebate u pon , such price, on the condition .
.") .
or
Defendants do
not appear to contest that these requirements are a l leged, so the
court will treat them as uncontested for the purpose of these
motions.
Boles v.
(M . D.N.C. 20 1 4) .
United States ,
3 F.
Supp .
3d 491,
507 n.10
In any event, it appears that Plaintiffs have
adequately pleaded these elements.
Kolon , 637 F . 3d at 450 (" [T]his
Court has previously noted that when monopolization has been found
the defendant controlled seventy to one hundred per cent of the
relevant market . "
<_![<JI
81 ,
84,
161-63
(internal quotat ion marks omitted)) ;
(al leging agreements with
(Doc . 150
substantially al l
leading distribu tors; market share in excess of 70% during relevant
time period for five of six Ais and 40% for Corteva ' s acetochlor
(based on its joint venture partner h aving approximately 50%); and
conditional payme n ts).)
To prevail , Plaintiffs must plausibly allege that Defendants '
58
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 58 of 88
loyalty agreements constitute anticompetitive conduct and caused
antitrust injury.
issue,
there
Microsoft , 253 F.3d at 58-59 .
is no
set
formula to demonstrat e
conduct under the rule of reason.
As to the first
anticompetitive
ZF Meritor 696 F.3d at 271.
Courts have considered
a showing of significant market power by the defendant ,
substantial
foreclosure,
contracts
of
sufficient
duration to prevent meaningful competition by riva l s , []
an analysis of likely or actual anticompetitive effects
considered in light of any procompetitive effects [,]
whether there is evidence that the dominant firm engaged
in coercive behavior , [] the ability of customers to
terminate the agreements [, and t Jhe use of exclusive
dealing by competitors of the defendant[ . ]
ZF
Meritor,
696
F.3d
(collecting cases) .
at
271-72
(internal
An allegation of a
foreclosure is not required.
citations
omitted)
percentage of market
Kolon , 637 F.3d at 452 n.12 .
As to
the second issue, an antitrust injury is "of the type that the
statute was intended to forestall"
Microsoft ,
253 F . 3d at 59
(quoting Brunswick Corp. v. Pueblo Bowl-0-Mat , I nc., 429 U.S. 477,
487-88 (1977))
brought
by
(internal quotation marks omitted) .
t he
Government,
it
must
"[I]n a case
demons t rat e
that
the
monopo l ist ' s conduct harmed competition , not just a competitor."
Id.
Section 1 and 2 of the Sherman Act and Section 3 of the
Clayton Act require different degrees of
substantial ity.
The
Supreme Court has implied in dic t a that Section 3 of the Clayton
Act requires a lesser showing than the Sherman Act does:
"[I]f
59
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 59 of 88
[the contract] does not fall within the broader proscription of
§ 3 of the Clayton Act it follows that it is not forbidden by those
of the [Sherman Act]."
Tampa Elec . ,
365 U. S . at 335 {summarily
rejecting Sherman claims after re jecting Clayton claim).
The
majority of courts have since followed Tampa Electric' s dicta.
See,
e.g . ,
Microsoft Corp.,
Hovenkamp,
supra
<][
253 F .3d at 69;
1800c4 n. 67
see also Areeda
{collecting cases).
&
As between
Sections 1 and 2 of the Sherman Act, Section 2 may require less
foreclosure to be substantial than Section 1 .
Microsoft Corp . ,
253 F.3d at 70 {"[A] monopolist's use of exclusive contracts , in
certain circumstances, may give rise to a§ 2 violation even though
the contracts foreclose less than the roughly 40% or 50% share
usually requ ired in order to establish a§ 1 violation.").
Corteva lodges several arguments that it contends establish
per se legality , namely that the agreements are voluntary and cover
nei t her
1 00%
distributors'
of
the
goods .
distributors
nor
It is true t hat
100%
of
participating
courts have factored in
whether customers were "free to walk away from the discounts at
a ny time ."
Concord Boat ,
207
F . 3d at
1059;
see also Allied
Orthopedic, 592 F.3d at 995 (affirming district court that found
t hat agreements were "voluntary and [could] be ended at any time,
and hospi tal s
[were]
t hus free to switch to more competitively
priced generics"); Omega Env't,
duration
and
easy
127 F . 3d at 1163
terminability
of
these
("[T]he short
agreements
negate
60
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 60 of 88
substantially
However,
their
t hese
dispositive,"
potential
cases
as
do
Corteva
not
to
foreclose
treat
t his
suggests.
By
competition.") .
fact
as
contrast,
"entire ly
courts
are
admonished to look to "the practical effect" of exclusive dealing
agreements.
Tampa Elec . , 365 U. S . at 326.
By doing so, courts
have fo und de facto partial exclusive dealing arrangements to be
cognizable violations under antitrust law.
ZF Meritor,
696 F.3d
at 282; Concord Boat, 207 F.3d at 1059 ("[C]laims that allege only
de facto exclusive dealing may be viable.").
Assuming
Defendants'
agreements
are
formally
voluntary,
Plaintiffs have plausibly alleged that the Defendants'
market
share targets combined with the schedule of payments and threat of
non- price retaliation create de facto exclusivity.
t he
complaint
alleges
that
t he
"complexity,
For example,
uncertainty,
and
timing" of payments "make it less likely t hat a distributor will
lower its prices" and that the t hreat of "canceling distribution
contracts, delaying access to new products , or withholding product
allocation during a supply shortage" instills strict compliance.
(Doc. 149 <J[<J[ 85-88.)
The complaint also alleges t ha t t he loyal ty
discounts
incentive
manage"
create
their
an
generic
for
purchases
distributors
and
"steer"
to
"strictly
customers
toward
loyal ty discount-qualifying products despite consumer demand for
generics.
(Id .
plausible
that
<J[<J[
95,
104 ,
Defendants'
117,
1 47 .)
loyalty
In other words,
discount
programs
it is
are
61
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 61 of 88
"as
effective as express purchase requirements."
See ZF Meritor , 696
F.3d at 283 (recognizing voluntary agreement as de facto exclusive
dealing because
"no
risk averse business would
jeopardize its
relationship with the largest manufacturer of transmissions in the
market" (internal quotation marks omitted)); Dentsply, 399 F . 3d at
194 ("[I]n spite of the legal ease with which the relationship can
be terminated,
the dealers have a strong economic incentive to
continue carrying [the defendant's product]."); McWane , 783 F.3d
at
833-34
(rejecting
argument
that
short-term
and
voluntary
exclusive dealing agreements are " presumptively legal ").
Moreover, the lack of complete exclusivity is not fatal to
Plaintiffs '
claims ,
as
Corteva argues .
It contends
that
the
ability of distributors to purchase some generics and the fact
that
some distributors
(approximately 20%)
creates a presumption of legality.
do
not participate
This position appears at odds
with Tampa Electric, which requires that Plaintiffs demonstrate
the
exclusive
contract's
a
probable
substantial
share
effect
is
of
line
the
to
"foreclose
competition
in
of
commerce
affected ."
365 U.S . at 327 (emphasis added); see also 15 U.S.C.
§ 14 (" . . . where the effect of . . . such condition, agreement,
or understanding may be to substantially lessen competition [. J"
(emphasis added)).
"[ J]ust as 'total foreclosure' is not required
for
deali ng
an
exclusive
arrangement
to
be
unlawful ,
complete exclusivity required with each customer."
nor
is
ZF Meritor ,
62
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 62 of 88
696 F.3d at 283 (analyzing claim under the Sherman Act).
Rather
than treating lack of true exclusivity or voluntariness as legall y
dispositive , the court may weigh the relevance of these facts at
a later stage.
See, e . g . , Concord Boat , 207 F . 3d at 1060 (weighing
lack of true exclusivity on review of summary judgment order) .
Syngenta's
argument
that
dismissal
is
warranted
because
Plaintiffs did not explain why generic competitors do not lower
their price to make their products more profitable to distributors
is similarly unpersuasive at this stage.
(Doc . 1 00 at 35 . )
Even
assuming , without deciding ,
that Plaintiffs bear this burden at
this
plausibly
stage,
they
have
alleged
that
generic
manufacturers' attempts to lower their prices would be futile in
the presence of the
loyalty programs .
This
follows
from the
allegation that distributors would not be willing to accept the
risk of losing all supply from Defendants and becau se Defendants '
forec l osure of the most efficient distribution channel imposes
costs
on
generic
effectiveness . "
This
allegations
manufacturers
market
contention
is
regarding
azoxystrobin
because
program."
(Id.
has
"harmed
the [ ir]
(Doc . 149 <JI 170 , 173 . )
supported
by
Plaintiffs '
manufacturers
of
generics
attempted to enter the market.
Syngenta' s
that
of
<][<JI
and
Manufacturers
metolachlor
"constraints
96-97 , 11 8 , 120.)
that
have
of generics
a llegedl y
imposed by
specific
exited
Syngent a ' s
of
the
loyalty
One generic manufacturer of
63
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 63 of 88
azoxystrobin that sought to mix azoxystrobin with a
fungicide
failed because the distributor feared it could impact its abi li ty
to meet the market-share target.
(Id.
~[<)[
96-97.)
Manufacturers
of generics of mesotrione were also hindered from entering the
market, an issue Plaintiffs allege was exacerbated by Syngenta's
agreement to supply Corteva with mesotrione under the condition
that Corteva's products containing mesotrione be treated neutrally
(Id.
under Syngenta 's Key AI program .
105; Doc. 81
CJ[
CJ[
109.)
Plaintiffs allege that a generic manufacturer of Corteva 's
rimsulfu ron "canceled or deferred entry plans," despite farmer
demand for lower-priced generics of rimsulfuron.
(Doc. 1 49 CJ[ 132.)
According to the complaint, generics of oxamyl found some success
in the market during a "plant outage" at Corteva from 2 015 to 2017 ,
but thereafter under Corteva' s
plummeted ,
particularly
manufacturers
could
lowering prices . "
not
(Id.
CJ[
at
loyalty program,
large
retain
136-38.)
"generic sales
distributors,
distributor
and
business
generic
even
by
One Corteva manager allegedly
said of this pattern , "[O]ur team truly has done an A+ job blocking
generics."
(Id.
<JI
138.)
Finally,
a
generic manufacturer of
acetochlor that was priced "substantially below Corteva 's prices"
allegedly
made
"little
headway"
because
major
distributors
declined to purchase the generic due to Corteva's loyalty program.
(Id.
CJ[
14 8 . )
At this preliminary stage,
t he court must accept
these plausible factual allegations as true and draw all reasonable
64
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 64 of 88
inferences in Plaintiffs'
favor.
Through this lens,
Defendants
have not demonstrated that the widespread failure of generics to
enter the market is due to competition on the merits rather than
plausibly anticompetitive conduct by Defendants.
Finally,
Plaintiffs have plausibly alleged anticompetitive
conduct and injury .
In Kolon, the Fourth Circuit, in reviewing a
Sherman Act§ 2 claim on motion to dismiss, held that an allegation
of dominant market share and exclusionary conduct was sufficient
at the pleading stage.
637 F.3d at 452 (citing Advanced Health-
Care Servs., Inc. v. Radford Cmty. Hosp., 910 F.2d 139 , 147 (4th
Cir . 1990)).
While the court also held that pleading a percentage
of market foreclosure is not necessary, Plaintiffs have pleaded a
foreclosure
market."
of
"approximately
(Doc. 81
70%
or more
of
each
applicable
171); see Microsoft, 253 F . 3d at 70 (finding
~
substantial 40 - 50% of market foreclosure under Sherman Act § 2
claim) .
Under
all
of
the
antitrust
statutes,
Plaintiffs'
allegations of substantial foreclosure are plausible and,
at a
minimum, "turn[] on a factual dispute ill suited for the pleadings
stage."
F.T.C .
(D.D . C . 2020) .
argument
v.
Surescripts,
LLC,
424
F.
Supp.
3d 92,
104
Moreover, for the reasons noted above, Syngenta's
that
Plaintiffs
have
not
alleged
anticompetitive
conduct because they have not alleged predatory pricing - likewi se
fails.
To t he extent these arguments apply under the rule of
reason, they appear to speak to "whether an otherwise unacceptable
65
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 65 of 88
level
of
market
efficiencies. "
foreclosure
Chuck' s Feed,
is
justified
by
procompetitive
81 0 F.2d at 1294 ;
(Doc . 100 at 34
(framing price reduc t ions as procompetitive) . )
Simply put ,
the
court is not equipped at this stage and on this record to weigh
the
merits
of
this
procompetitive
justification
against
the
plausible allegations of market foreclosure .
Pl aintiffs have a l so sufficiently al l eged antitrust injury.
They claim harm to farmers , growers,
and generic manufacturers,
and that Defendants ' conduct "may substantially lessen competition
or
tend
to
[m]arkets. "
create
or
maintain
(Doc. 1 49 <JI<JI 164 - 66 . )
monopolies
in
the
[r]elevant
Specifically, Plaintiffs a llege
that generic manufacturers have been substantially foreclosed from
the most efficient channel of distribution (id. 11 170 - 71); that
the structure of the payments over an extended period of time, and
across multiple crop- protection produc t s containing the same AI ,
make it l ess likely that discounts will pass on to end-consumers
(id. 11 173-75) ; that distributors have "omitted generic products
from their price lists ,
refused customer reques t s for generics ,
declined generic companies '
offers to supply, and systematical ly
steered retailers and farmers toward branded products" (id . <JI 177);
that the l oyal ty programs have caused generics to exi t
or never
enter the market (id . <JI1 182-85); and that the loyalty programs
have
stunted innovation
alleges that Defendants '
(id .
11
186- 89) .
The
complain t
also
internal analyses acknowledge that the
66
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 66 of 88
loyalty
programs
lead
to
supracompetitive
prices
for
end-
(Id. ~i 1 94-200.)
consumers.
In sum,
neither
are
depends
on
Defendan t s '
contention that their loyalty programs
anticompetitive
further
factual
nor
cause
anticompetitive
development .
At
this
injury
stage ,
the
complaint plausibly alleges both. 10
3.
Claims Against Syngenta Corporation and Syngenta
Crop Protection AG
Syngenta
cognizably
argues
connect
that
Syngenta
"Plaintiffs '
a l legations
Corporation
or
do
not
Syngenta
Crop
(Doc .
100 at
Protection AG to the challenged rebate program ."
44 . )
two
Consequently, Syngenta contends ,
entities
Corporation ,
should
Syngent a
be
dismissed .
the claims a gainst those
(Id . )
maintains t hat more
is
As
to
Syngenta
requ ired t han an
allegation that Syngenta is a "single enterprise " and that one
person is the president of both Syngenta Corporation and Syngenta
Crop Protection, LLC .
(Id . at 44-45.)
And as to Syngenta Crop
Protection AG, Syngenta argues that Plaintiffs ' "vague al l egations
of high-level oversight and strategic guidance" are insufficient
10
Plaint iff FTC argues that i t s sect ion 5 claim is a "standalone" claim .
In part icular, the FTC argues that the price- cost
(Doc . 150 at 45.)
test should not apply to i t s section 5 c l aim, regardless of how the court
rules on t he Sherman Act and Cl ayt on Act claims.
(Id. a t 47.) Because
Plaint iffs plausibly allege violat ions of t he Sherman Act and Clayt on
Act , the court will deny Defendants ' motion to dismiss Plaint iff FTC ' s
section 5 c l aim for the same reasons as for the Sherman Act and Cl ayton
Act clai ms . Therefore , whether or not the court may f i nd i t necessar y
to pa r se distinct ions bet ween the statu tes a t a l a t er s t age in this
action, i t need not do so now .
67
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 67 of 88
in light of Plaintiffs '
"conce[ssion] that the global parent is
not responsibl e for ' impl ementation ' of post-patent strategies in
individual countries . "
Plaintiffs
Corporation ' s
(Id. at 45.)
respond
shared
that
senior
their
allegations
leadership
with
of
Syngenta
Syngenta
Crop
Protection, LLC, and management of contacts with Corteva regarding
the mesotrione and metolachlor supply agreements suffice to state
claims against Syngenta Corporation .
at 65-66 . )
(Doc. 150 at 65-66 ; Doc. 11 2
Further, Plaintiffs contend that they have stated a
claim against Syngenta Crop Protection AG because it "directs and
oversees" the LLC ' s post-patent strategy, "reviews , modifies, and
approves
Syngenta' s
U.S.
budget,
which includes
sales
targets
based on Syngenta' s loyalty program, " and was " directly involved
in
the
negotiation
Corteva .
of"
the
mesotrione
supply
agreement
with
(Doc. 150 at 66.)
To be sure, Plaintiffs do not a llege a conspiracy between the
Syngenta entities.
Parents and subsidiaries, as well as sister
subsidiaries , are "incapable" of conspiring with one another under
Sections 1 and 2 of the Sherman Act and Section 3 of the Clayton
Act.
Copperweld Corp . v . Independence Tube Corp . ,
768 , 777 (1984)
(parent-subsidiary under Sherman Section 1); Lenox
MacLaren Surgical Corp. v. Medtronic,
(10th Cir .
2017)
("[S] ubsidiaries
under
of the
Sherman Act. .
§
1
467 U. S . 752,
Inc.,
are
84 7 F. 3d 1221,
1234
incapable
of conspiring
[W] e
conclude
also
that
68
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 68 of 88
Copperweld' s
§ 2.");
reasoning with respect to
Advanced
Health-Care
1
§
Servs.,
910
applies equally to
F.2d
at
1 46,
152
(extending Copperweld to sister subsidiaries under Sherman Section
1 and Clayton Section 3).
Instead, "[t]he coordinated activity of
a parent and its wholly owned subsidiary must be viewed as that of
a single enterprise[ . ] "
Copperweld, 467 U.S. at 771.
In Lenox MacLaren, the Tenth Circuit affirmed on other grounds
but wrote at length on the district court's error in treating each
corporate affiliate as a separate entity rather than a
enterprise."
847
F.3d at
1230-39.
The
court
"single
observed that
requiring each corporate affiliate to independently satisfy every
element of an antitrust violation "would be difficult to justify"
because the Supreme Court and other courts have sealed off access
to the claim of conspiracy between corporate affiliates .
1236 (citing Copperweld, 467 U. S . at 776- 77) .
Id . at
Moreover, the court
reasoned that Copperweld must foreclose sophisticated corporations
from
"spread[ing]
its
anticompetitive
scheme
over
multiple
subsidiaries , such that no one entity met all the requirements for
individual antitrust liability."
Id.
But the Lenox MacLaren court
was careful to cabin the reach of the single-enterprise theory by
emphasizing Copperweld' s restriction of intra-enterprise liability
only
to
"coordinated
activity"
of
affiliates.
Id.
at
1237
(emphasis in original).
Indeed,
"[a] nti trust
law doesn't
recognize guilt
by mere
69
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 69 of 88
association ,
imputing
corporate
liability
to
any
affiliated
company unlucky enough to be a bystander to its sister company ' s
alleged misdeeds."
SD3, LLC v. Black & Decker (U.S . ) Inc . ,
F.3d 412, 422 (4th Cir. 2015).
801
"[I]n the antitrust context, courts
have held that absent allegations of anticompetitive conduct by
the parent, there is no basis for holding a parent liable for the
alleged antitrust violation of its subsidiary."
Arnold Chevrolet
LLC v.
(E.D.N.Y.
Tribune Co.,
418 F.
Supp .
2d 172,
178
2006)
(citing Invamed. Inc. v. Barr. Lab'ys, Inc., 22 F. Supp. 2d 210,
219 (S.D.N.Y. 1998); see also United States v. Bestfoods, 524 U.S.
51, 61 (1998)
("It is a general principle of corporate law deeply
ingrained
our
in
economic
and
legal
systems
that
a
parent
corporation . . . is not liable for the acts of its subsidiaries."
(internal
quotation marks
omitted)).
Accordingly,
claims may
properly be dismissed against parent corporations where "at least
as to them,
the 'complaint was vague, never explained its case,
and lumped [them] together without sufficient detail.'"
Decker,
801 F . 3d at 423
F.3d 951 ,
958
(7th Cir.
Black &
(quoting Bates v . City of Chicago,
2013)).
Here ,
726
the complaint defines
"Syngenta" as "Syngenta Crop Protection AG, Syngenta Corporation,
and
Syngenta
Notwithstanding
Crop
Protection,
LLC."
(Doc.
149
<JI
this
definition,
Plaintiffs
still
must
allege
1.)
sufficient independent but coordinated activity for each named
corporate affiliate.
Black & Decker, 801 F . 3d at 422 .
70
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 70 of 88
While the
adopting
Lenox MacLaren court ultimately refrained from
either
party ' s
proposed
definition
activity, " the court considered as tests
(1)
of
"coordinated
"[w] hen the parent
controls, dictates or encourages the subsidiary's anticompetitive
conduct"; and (2) "that each defendant must have played a
' role'
-
of
or
'participated'
in
enterprise as a whole."
Co. v. Molychem,
2005)).
the
anticompetitive
conduct
the
Id. at 1237-38 (quoting Climax Molybdenum
L.L . C.,
414 F .
Supp.
2d 1007,
1012
(D.
Colo.
Plaintiffs appear to endorse the "controls, dictates, or
encourages" test.
(Doc. 150 at 65-66 (citing Intellectual Ventures
I LLC v. Cap. One Fin. Corp., Case No. 1 4-1 11 , 2016 WL 1 60263, at
*5
(D . Md.
2015) ;
Channel Commc'ns ,
2004)).)
Nobody in Particular Presents,
Inc., 311 F. Supp. 2d 1048, 1068- 70
Syngenta
articulation
of
Inc. v . Clear
does
the
not
take
a
standard
and
relied
questioned about it at the hearing.
position
on
on
its
(D. Colo.
the
proper
briefs
when
(See Doc. 1 00 at 44-45; Doc.
130 at 23; Doc. 157 at 98:18-23 . )
At least at the time of the complaint ,
the same individual
served as t he president of both Syngenta Corporation and Syngenta
Crop Protection, LLC .
t hat
(Doc . 149 'J[ 35 . )
Syngenta Crop Protection AG has
Further, Plaintiffs allege
"directed,
approved Syngenta 's sales and marketing strategy,
loyalty program."
(Id .
'J[
36.)
AG allegedly has " reviewed ,
overseen ,
and
including its
Moreover, Syngenta Crop Protection
modified,
and approved" Syngenta' s
71
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 71 of 88
U.S. budget , which includes the sales targets associated with Key
AI, and provides "generic defense" strategy to be "tailored for
(Doc. 81 i 36 (quoting Syngenta
implementation in each count ry ."
Crop
Protection
Finally,
AG ' s
Plaintiffs
global
allege
post-patent
that
strategy
executives
of
handbook).)
Syngenta
Crop
Protection AG were "directly involved in the negotiation" of the
Syngenta-Corteva mesotrione supply agreement ,
t hat
Syngenta Crop
Protection AG is t he Syngenta entity that signed the agreement,
and that
a
Syngenta Corporation executive
"manages
contacts with Corteva regarding the agreement."
Based on t hese allegations,
that
the
complaint
activity. "
As a
fails
result ,
to
Syngenta' s
(Doc. 149 1 111.)
Syngenta has not demonstrated
plausibly
allege
"coordinated
the motion to dismiss
Syngenta Crop
Protection AG and Syngenta Corporation will be denied.
4.
Article II Challenge to FTC Authority
Defendant
Corteva
argues
that
the
"FTC' s
claims
must be
dismissed because the FTC lacks the constitutional authority to
bring these claims . "
(Doc . 95 at 30 . )
Plaintiff FTC ' s alleged
authori ty to bring this lawsuit arises under Section 13(b) of the
FTC Act,
15 U. S . C.
§
53 (b) .
(Doc . 14 9 i
2. )
Corteva contends
t hat Congress ' grant of authority to the FTC to pursue relief under
t hese provisions amounts to a grant of executive law-enforcement
power
that
is
unconstitutional
because
removable at will by the President."
its
(Id .
" members
are
not
(citing Humphrey's
72
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 72 of 88
Executor v. United States, 295 U.S. 602
(1935); Seila Law LLC v.
Consumer Fin . Protection Bureau, 140 S. Ct. 2183 (2020) .)
Corteva
maintains that because executive agencies must be subject to the
President's removal power, the suit before this court cannot go
forward .
(Id . at 32.)
The FTC responds that Corteva' s Article II
challenge is untimely because it was not raised in its motion to
dismiss the original complaint .
(Doc . 15 0 at 61 . )
Moreover, in
t he FTC ' s view, Corteva "grossly misinterpret[s] binding Supreme
Court precedent" by misstating the FTC' s historical powers and
ignoring
features
agencies.
(Id.
of
the
FTC
that
distinguish
it
from
other
(quoting Fed. Trade Comm' n v. Roomster Corp . , No.
22 Civ . 7389, 2023 WL 1438718, at *8
(S . D.N . Y. Feb. 1, 2023)) . )
Finally,
if Corteva were
the
FTC
contends
that even
dismissal of the action would be the improper remedy .
correct,
(Id . )
In
reply , Corteva contends that its claim is not waivable because it
is akin to a subject matter jurisdiction challenge.
(Doc. 1 33 at
17-18.)
As to timeliness,
Procedure 12 (g) (1).
the FTC cites to Federal Rule of Civil
(Doc.
150 at 61.)
But this rule does not
support the FTC' s position that Corteva waived its argument by
omitting it in an earlier motion to dismiss.
Rule 12 (g) (1) applies
to joinder of motions and is t hus inapplicable here.
In any event,
the Federal Rules do not otherwise support the FTC' s position.
Rule 12(h) (1) provides that a party waives any de fense available
73
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 73 of 88
under Rules 12(b) (2)
through (5) if the defense was available to
the party at the time of an earlier motion.
12 (h) (1)
Fed .
R.
Civ.
P.
(providing for waiver through omission as described in
Rule 12(g)(2) 11 ).
Notably,
these include motions
to challenge
personal jurisdiction , venue , and service of process , not a motion
to dismiss for failure to state a claim upon which relief can be
granted
(Rule 12 (b) (6))
(Rule 12 (b) (1)).
or lack of subject matter jurisdiction
Fed. R. Civ. P. 12 (h) (1) and (3).
In fact, the
1966 Advisory Committee note to Rule 12(h) states that , "while the
defenses specified in subdivision (h) (1) are subject to waiver as
t here provided, the more substantial defense[] of failure to state
a
claim upon which relief can be granted
[is]
expressly
preserved against waiver by amended subdivisi on (h) (2) and (3) . u
Fed. R. Civ. P. 12 (h) advisory comm. note (1 966 amend.)
(emphasis
added) .
Similarly, the FTC 's citation to Rowley v. McMillan, 502 F.2d
1326
(4th
Cir .
1974)
is
misguided .
In
Rowley ,
the
court
interpreted Rule 12(g) to mean t hat "an amendment to the pleadings
permits
the
responding
pleader
to
assert
only
such
of
those
defenses which may be presented in a motion under Rule 12 as were
11
Rule 12 (g) (2) provides:
Except as provided in Rule 12(h) (2) or (3), a party that makes
a moti on under this rule must not make another motion under
this rule raising a defense or objection that was available
to the party but omitted from its earlier motion .
74
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 74 of 88
not available at the time of his response to the initial pleading.n
Id. at 1333.
Despite this broad language covering "defenses,n the
issue before the court was a waiver of a personal jurisdiction
defense
pursuant
12(h) (l)'s
to
strict
Rule
waiver
12 (b) (2),
rules.
which
Id .
is
at
covered
1333.
by
Rule
Cases
that
approvingly cite Rowley deal similarly with the 12(b) (2)
( 5)
defenses that Rule 12 (h) ( 1)
covers.
See,
e . g. ,
through
Hand Held
Prods., Inc . v . Code Corp . , 265 F. Supp. 3d 640, 643 (D.S.C. 20 1 7)
(challenging venue);
Maxtena,
Inc .
v.
2012 WL 113386 (D. Md. Jan. 12, 2012)
Marks,
to
raise
same
"little would be
constituti onal
(challenging service
argument
gained by preventing
& Proc.
§ 1388
determination
of
[12(b) (6)
Corteva
argues
analogy
is
arguments]
that
its
both unnecessary to
save
20 1 2)
("If
a
plaintiff
colorable claim 'arising under'
to
be
constitutional
its
argument
in any event .
Holloway v. Pagan River Dockside Seafood I nc.,
Cir.
is
(2023)
subject matter jurisdiction,
appears to be an improper characterization
(4th
so
Prac .
("[E]arly
is akin to non - waivable
answer,
under Rule []
Fed .
While
its
defense
Wright and Miller ,
encouraged.").
in
a
12 (b) (6)."
such an
11-0945,
Moreover, Rule 12(h) (2) clearly author i zes Corteva
this
challenge
No.
(same); Lederman v. United
States, 131 F. Supp. 2d 46, 58 (D.D.C. 2001)
of process).
Civ .
669 F.3d 448,
invoking§ 1331 pleads
and
See
453
a
the Constitution or laws of the
United States, he i nvokes federal subject matter jurisdiction, and
75
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 75 of 88
deficiencies
of
the
claim
should
be
addressed
mechanisms provided by the federal rules."
marks and citations omitted)) .
by
the
other
(internal quotation
This is a long way of explaining
that the court must turn to the merits of Corteva's constitutional
challenge.
The power to enforce the law is vested in the President of
the United States.
person
could
U.S. Const. art. II, § 1.
fulfill
that
responsibility
"Because no single
alone,
the
Framers
expected that the President would rely on subordinate officers for
assistance. "
Seila Law ,
140 S. Ct.
at 2191.
" [A] s
a general
matter," t he Constitution gives the President the power to remove
subordinate officers so that the President can be held "fully
accountable
for
discharging
Enterprise Fund v.
477 ,
514
his
own
responsibilities."
Pub . Co. Accounting Oversight Bd.,
(2010) .
There
are
"only
two
exceptions"
President's otherwise unrestricted removal power.
S. Ct. at 2192 .
Free
56 1 U.S.
to
the
Seila Law, 140
First , Congress may create "expert agencies led
by a group of principal officers removable by the President only
for good cause ."
(emphasis
Id.
(citing Humphrey's Executor , 295 U.S. 602)
in original) .
Second,
Congress may provide "tenure
protections to certain inferior officers with narrowly defined
duties."
(1886);
Id.
(citing United States v.
Morrison v.
original).
Olson,
487
U. S.
654
Perkins,
116 U.S.
483
(1988))
(emphasis
in
The parties agree that this case implicates only the
76
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 76 of 88
first exception.
Under
the
"inefficiency,
U.S.C . § 41.
(Doc. 95 at 31 ; Doc. 150 at 61.)
FTC Act,
commissioners
neglect of duty ,
are
removable
only
for
or malfeasance in office . "
15
Five members sit on the Commission and are appointed
Id .
by the President and confirmed by the U. S. Senate .
The FTC
Act includes a "separability clause" that states that the other
provisions of the FTC Act "shall not be affected" by a court's
holding that finds any provision invalid.
15 U. S . C. § 57 .
The constitutionality of the FTC commissioner's
for-cause
protection was first addressed in Humphrey' s Executor,
295 U.S.
602
(1935).
In 1933, President Frankl in Delano Roosevelt sought
the removal of Commissioner William E . Humphrey, who was appointed
by President Herbert Hoover.
Id. at 618.
After Humphrey rebuffed
his resignation request, President Roosevelt wrote him : "Effective
as
of
this
Commissioner
date
of
you
hereby
Federal
removed
the
the
Supreme
the
the
FTC
is
I d.
of
Reviewing the constitutionality of the President's action,
that
Commission."
office
61 9.
observed
Trade
from
at
Court
the
are
"charged
with
enforcement of no policy except the policy of the law," adding
that
" [i] ts
duties
are
neither
political
nor
executive,
predominantly quasi judicial and quasi legislative."
but
Id. at 624.
The court reasoned that the authority of Congress to create quasi
legislative or quasi judicial agencies "cannot well be doubted"
and includes the power to "forbid their removal except for cause . "
77
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 77 of 88
I d. at 629 .
In supporting Congress ' authority to restrict removal,
the Court observed that its ho l ding would not offend the separation
of powers because the FTC was creat ed by Congress "as a means of
carrying into operation legislative and judicial powers " and was
"wholly disconn ected from the executive department."
The
Supreme
Court
Humphrey ' s Executor.
has
since
q uestioned
the
Id. at 630.
holding
of
See , e . g. , Seila Law, 140 S. Ct . at 2198 n.2
("The Court ' s conclusion [in Humphrey ' s Executor] that the FTC did
not exercise executive power has not withstood the test of time . ");
Morrison , 487 U. S . at 690 n.28 ( "[ I]t is hard to dispute that the
powers of the FTC at t h e time of Humphrey ' s Executor wou l d at the
present time be considered 'executive ,' at least to some degree . ") .
Nevertheless , the Court has declined to overrule this " entrenched
Supreme Court preceden t , protected by stare decisis . "
Cnty . ,
645
F . 3d
428 ,
446
(D . C.
Cir.
2011)
In re Aiken
(Kavanaugh,
J .,
concurring); see a l so Coll ins v. Ye llen, 1 41 S. Ct . 176 1 , 1 786-87
(202 1 )
(citing
Humphrey ' s
Executor
as
a
counter-analogy
and
striking down removal restriction as violation of separation of
powers) .
Congress added the FTC' s authority to file suit under section
13(b) in 1973 - decades after the Court decided Humphrey ' s Executor
i n 1935.
See Pub. L . No.
93- 153 ,
§
408 ,
87 Stat.
592
(1973).
While Corteva is correct that the FTC' s authority u nder section
13(b) is executive in nature , that is about where the merit of its
78
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 78 of 88
constitutional challenge ends.
First,
Corteva effectively asks
this court to overrule Supreme Court precedent .
a lower court is clear :
But the role of
"If a precedent of [the Supreme] Court
has d irect application in a case, yet appears to rest on reasons
rejected in some other line of decisions, the [lower court] should
follow the case which directly controls, leaving to [the Supreme]
Court the prerogative of overruling its own decisions."
v . Felton, 52 1 U. S . 203, 237
v.
Shearson/Am.
Humphrey' s
Express,
Executor
(1 997)
Inc. ,
directly
Agostini
(quoting Rodriguez de Quijas
490
U. S.
addresses
477,
whether
485
(1989)) .
Congress
may
restrict the removal power of FTC commissioners , so the court could
stop its analysis here. 12
Second, even were the court to accept Corteva's position that
t he
FTC
commissioners
must
be
removable,
Corteva's
relief - dismissal of the suit - would be inappropriate .
requested
Corteva
12
Even so, there is hardly a consensus, as Corteva contends, that
Humphrey's Execu tor is wrong in light of the FTC' s greater scope of
authority since the case was decided. See, e . g., Seila Law , 140 S. Ct.
at 2198 ("Rightly or wrongly, the Court viewed the FTC (as it existed
in 1935) as exercising ' no part of the executive power.'" (quoting
Humphrey's Executor, 295 U.S. at 628)); id. at 2200 n.4 ("Perhaps the
FTC possessed broader rulemaking , enforcement, and adjudicatory powers
than the Humphrey's Court appreciated.
Perhaps not.
Either way, what
matters is t he set of powers the Court considered as the basis for its
decision, not any latent powers that the agency may have had not alluded
to by the Court."); id. a t 2239 n. 10 (Kagan, J. , concurring in the
judgment with respect to severability and dissenting in part) (describing
the FTC's authority in 1935 as
including the power t o "run
investigations,
bring
administrative
charges,
and
conduct
adjudications"). Simply put, this court is not at liberty t o "read the
tea l e aves" of the Supreme Court with respect to settled precedent .
Stewart v . Justice, 518 F . Supp . 3d 911, 917 (S . D.W . Va . 2021).
79
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 79 of 88
contends that the FTC cannot "both enjoy its removal protections
as
upheld
in
Humphrey's
Executor
and
e xercise
the
'quintessentially executive' powers granted to it by Congress in
1973. "
(Doc . 95 at 32
(citing Seila Law,
140 S. Ct . at 2200) . )
But no case cited by Corteva suggests that the appropriate remedy
would be to excise the FTC ' s executive power .
To the contrary,
the Supreme Court ' s cases on removal suggest the exact opposite.
In Seila Law , the Court held the CFPB director must be removab l e,
severed the provision restricting removal, and declined to strike
down
the
authority.
Consu mer
Financial
140 S . Ct. at 2199.
Protection
Bureau ' s
enforcement
In Free Enterprise Fund, the Court
held that the removal restrictions of the Public Company Accounting
Oversight
Board
violated
the
separation
of
powers ,
but
it
explicitly upheld the board's regulatory authority .
561 U. S . at
508 - 09 .
the
And
in
Collins ,
the
Court
struck
down
removal
protections for the Federal Housing Finance Agency director , but
it nevertheless stated that "there is no basis for concluding that
any
head
of
the
FHFA
lacked the
functions of the office . "
Congress
oversteps
removal power ,
its
141 S.
authority
authority to
carry o u t
Ct. at 1788.
Thus ,
to
restrict
the
even if
President's
a principal officer may still " undertake the
responsibi l ities of his office."
the
[]
Id. at 1 788 n.23.
In s um, Cort eva' s position tha t section 13(b) was void when
enacted is u npersuasive, and even if it were not , dismissal would
80
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 80 of 88
not be the proper remedy.
As a result, Corteva ' s motion to dismiss
based on its constitutional challenge will be denied.
5.
State Law Claims
Defendants argue that all of the state Plaintiffs'
(Doc.
should be dismissed .
Defendants
contend
that
95 at 34; Doc. 100 at 43.)
each
state's
(except
claims
First,
Tennessee ' s
and
Wisconsin's)
antitrust laws are "harmonized -
by statute or by
common law -
with t he federal antitrust laws."
(Doc . 95 at 34;
Doc. 100 at 43 . )
Consequently, Defendants maintain that the state
Plaintiffs' claims should be dismissed on the same grounds as the
federal claims.
(Doc. 95 at 34; Doc. 100 at 43.)
With respect to
Tennessee and Wisconsin, Corteva argues that the complaint fails
to allege "substantial effects that were felt in each respective
state."
(Doc . 95 at 35.)
Second, Corteva contends that Texas and
Indiana cannot recover civil damages under state antitrust laws
because t hose states are "prevent [ed]
from bringing damages
claims on behalf of end-consumers."
(Doc . 95 at 34-35 . )
Defendants
Indiana ,
argue
t hat
California,
and
Iowa
Third,
fail
to
adequate ly allege violations of the ir state unfair competition and
consumer fraud laws.
In response,
(Doc. 95 at 36; Doc . 100 at 43-44 . )
Plaintiffs first argue that state and federal
laws are not "automatically harmonized,
state."
(Doc .
150
at
68.)
As
to
and vary from state to
Tennessee
and Wisconsin,
Plaintiffs contend, they have met the substantial effects burden,
81
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 81 of 88
which they characterize as "low."
(Doc. 150 at 71-72.)
Second,
Plaintiffs argue that Texas and Indiana are not seeking damages on
behalf of "end-consumers," and , in any event , these states are not
barred from recovering civil penalties.
Third, Plaintiffs contend
that the California unfair competition claim and Indiana and Iowa
consumer protection claims are sufficiently pleaded .
As to the state antitrust laws that Defendants contend are
h armonized with federal l aw,
in light of the court ' s rulings on
the federal antitrust claims,
Defendants have not demonstrated
that
dismissed.
these
Wisconsin ,
claims
should
Defendants '
be
As
to
arguments similarly fail.
Tennessee
and
Tennessee and
Wisconsin courts require plaintiffs to allege that a defendant's
anticompetitive conduct had a "substantial effect" on intrastate
commerce."
See Meyers v . Bayer AG, Bayer Corp ., 735 N . W. 2d 448 ,
4 61 (Wis. 2 0 07)
( " [A ] complaint under the Wisconsin Anti trust Act
. is sufficient if it a lleges [anticompetitive conduct] that
substantially affected the people of Wisconsin and had impacts in
[Wisconsin] .");
Freeman
S.W . 3d 512,
(Tenn . 2005)
alleged
523
anticompetitive
Indus. ,
LLC v.
Eas t man Chem.
Co .,
172
("[C]ourts must decide whether the
conduct
affects
commerce to a substantial degree ." ) .
Tennessee
trade
or
"The [substantial effects]
test is pragmatic, turning on the particul ar facts of the case."
Freeman Indus . 172 S . W. 3d at 523 .
Under Wisconsin law, a plaintiff
need not allege that the impact of the conduct is "dist inguishable
82
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 82 of 88
from or disproportionate to its impacts on other states . "
735 N.W.2d at 320. 13
Meyers,
Under Tennessee law, a plaintiff need not
allege that the anticompetitive conduct "threaten[s] the demise of
Tennessee business
or affect [s]
market price
to
substantially
affect intrastate commerce," but a plaintiff must show more than
Freeman Indus . , 172
a "bare allegation" of substantial effects.
S.W.3d
at
524
(finding
allegation
insufficient
where
lone
plaintiff with ties to Tenne ssee did not allege that he purchased
goods from defendant).
Corteva claims that these Plaintiffs did no more than recite
each
state' s
legal
requirement
(Doc.
95
35-36.)
But
at
incorporated,
Tennessee's
by re - alleging,
complaint,
Tennessee
alleged
protection
products
at
individual
customers,
substantial
and
effects.
Wisconsin's
claims
every preceding allegation in the
that
issue
and
regarding
to
Defendants
sold
Tennessee
businesses
Wisconsin
al l eged
the
cropand
"substantial
foreclosure of generic competitors" within the state and that "many
hundreds of farmers" in the state have purchased crop- protection
products at supracompetitive prices due to the loyalty programs.
(Doc . 149 ~~ 253-54, 272, 274-75 . )
Accepting these facts as true ,
as the court must at this stage, Tennessee and Wisconsin plausibly
13
While the Meyers court announced this rule in light of its self
described "liberal pleadings standard," Meyers , 735 N. W. 3d at 320 ,
Defendants have not provided any authority to suggest that a different
result should obtain under the federal rules .
83
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 83 of 88
allege substantial effects.
As to Texas ' s and Indiana's claims, Corteva argues that the
indirect p u rchaser rule bars Texas and Indiana from recovering on
behalf of end-consumers .
The indirect purchaser rule restricts
indirect purchasers from recovering compensatory damages ,
in
limited
circumstances
not
relevant
here .
See
except
Dickson
v.
Microsoft Corp ., 309 F . 3d 193 , 214 (4th Cir. 2002) (citing Il l inois
Brick Co . v.
Illinois,
43 1 U. S.
720,
730 - 33
(1 977 ) ) .
However,
Defendants have not demonstrated that Illinois Brick extends to a
state seeking civil penalties.
See , e.g., Fed. Trade Comm'n v.
Mylan Lab ' ys, Inc., 62 F . Supp. 2d 25 , 46 (D.D.C. 1999) (dismissing
state
claims
for
actual
damages
under
Illinois
Brick
but
maintaining claims for civil penalties) ; Apple Inc. v. Pepper , 139
S.
Ct .
15 1 4 ,
1520 n. 1
("Illinois Brick held that
the direct
purchaser requirement applies to claims for damages . "
added) ) .
Additionally,
(emphasis
the cases that Corteva cites to support
Texas's and Indiana ' s prohibitions on parens patriae suits do not
s u pport extending Illinois Brick to those state's civil penalties
provisions.
596
See Berghausen v. Microsoft Corp . ,
(Ind . Ct . App.
2 002 )
765 N.E.2d 592,
(acknowledging application of Illinois
Brick to Indiana antitrust law but not discussing civil pena l ties
or suits brough t by the state); Abbott Lab ' ys , I nc. v . Segura, 907
S . W.2d 503 , 503- 04 (Tex. 1995)
(barring parens patriae suit under
state DTPA to recover damages, but not civil penalties , on behalf
84
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 84 of 88
of consumers).
Moreover, while all Plaintiffs identify harm to
end-consumers,
(Doc. 149
<JI
166),
the claims for civil penalties
are not damages compensation for consumers .
264.)
(Doc .
149 11 228 ,
Accordingly, on this record Texas's and India na ' s requests
for civil penalties survive t he motion to dismiss .
As t o California's unfair competition claim, Corteva argues
t hat
because Plaintiffs' antitrust claim should fail,
t he California unfair competition claim.
so should
The California Un fair
Competition Law covers conduct that "violates the policy or spirit"
of the antitrust laws "or otherwise significantly threatens or
harms competition."
Cel-Tech Commc ' ns, Inc. v . L.A. Cellular Tel.
Co., 20 Cal . 4th 163, 180-87 (1999) .
Because California re-alleged
and incorporated by reference all allegations in the complaint,
(Doc. 149 1 212), the court will deny the motion to dismiss on the
same bases that it has denied Defendants' motions with respect to
t he federal antitrust claims.
As to Indiana's consumer protection claim, Defendants argue
that Indiana did not specify an "incurable deceptive act" which,
in Corteva's view, must be alleged with particularity "as part of
a scheme, artifice, or device with intent to defraud or mislead . "
(Doc. 95 at 36 (citing Fed. R. Civ. P. 9(b); Thunander v. Uponor,
Inc., 887 F. Supp. 2d 850, 873 (D. Minn. 2012); Ind. Code§ 24-50 . 5 - 2(a) (8)) .)
Syngenta also argues that the theory of wrongdoing
is not illegal for the same reasons it offered to dismiss the
85
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 85 of 88
federal antitrust claims , which the court has now rejected at this
stage.
(Doc .
100 at
43 . )
Indiana responds that reliance on
Thunander is improper because the case predates an amendment to
Indiana's consumer protection law that expanded the scope of the
statute covering "deceptive" acts to also preclude "unfair" acts.
(Doc . 15O at 7 O. )
In Indiana 's view,
this amendment likens its
law to the California unfair competition law .
Lastly,
Indiana maintains t h at it does not need to show an "incurab le
deceptive act" because only private plaintiffs are subject to this
requ irement , not the state attorney general.
In 2014, Indiana amended its consumer protection statute to
prohibit
"an
unfair ,
abusive,
or
deceptive
act ,
omission,
practice in connection with a consumer transaction ."
or
2014 Ind.
Acts 736 , Ind . P.L . 65-20 14, § 7 (codified as amended at Ind. Code
§ 24 - 5 - 0.5- 3(a)).
Under section 4(a), "a person" may file suit to
recover damages for an "uncured or incurabl e deceptive act . "
Code§ 24-5-0 . 5-4(a) .
Ind.
An "incurable deceptive act" is one that is
"done by a supplier as part of a scheme, artifice, or device with
intent to defraud or mislead ."
Ind .
Code § 24-5-0.5-2 (a) (8).
Under sections 4(c ) and (g), the state attorney general may file
suit for an injunction and civil penal ties against "a deceptive
act."
Ind. Code§ 24-5-0.5-4(c) , 4(g).
First , Corteva has not provided any authority to support the
contention that "unfair " or "abusive" should be read more narrowly
86
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 86 of 88
than under the FTC Act, so the court will not read it so at this
time.
Second,
4 (c),
it appears that Indiana is correct that section
which grants authority to the state attorney general to
enjoin "a deceptive act," does not impose a requirement to show
that the deceptive act is "uncured" or "incurable."
the private party provision does.
4(a)
By contrast,
Compare Ind. Code. § 24-5-0.5-
("A person relying upon an uncured or incurable deceptive act
may bring an action . . . . "
0 . 5-4(c)
(emphasis added)), with id. § 24-5-
("The attorney general may bring an action to enjoin a
,,
deceptive act
(emphasis
added)) .
If this
additional
requirement were read into section 4(c), t he claim would apparently
sound in fraud and require pleading with particularity.
Code § 24 - 5-0. 5 - 2 (a) (8)
See Ind.
("act done . . . with intent to defraud or
mislead . "); Fed . R. Civ. P. 9(b).
While it appears that Indiana
has
this
the
better
of
the
argument,
question
of
statutory
interpretation is inadequately briefed to facilitate a definitive
resolution at t h is
stage,
so the court will
simply hold that
Defendants have not demonstrated for t he purposes of this motion
that Indiana has not stated a claim for relief.
Finally,
as
to
Iowa 's
consumer protection claim,
Corteva
argues that Iowa did not allege a "misrepresentation of material
fact . "
(Doc. 95 at 37 (citing Cota v. Ralph Lauren Corp., No. 21-
C-1089, 2022 WL 1597631, at *3 (E.D. Wis. May 19, 2022) .)
Syngenta
agrees
"unfair
and
adds
that
Iowa
also
did
not
allege
an
87
Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 87 of 88
practic [e]."
(Doc. 100 at 44 (citing Iowa Code§ 714 . 16 .)
Iowa
argues that the Iowa consumer protection l aw covers both deceptive
and unfair practices , and that Iowa has alleged an unfair practice.
(Doc. 150 at 70-71.)
The Iowa Consumer Fraud Act ,
unlawful
for
practice."
a
person
to
"act,
Iowa Code § 714 .1 6,
use
Iowa Code§ 714 .1 6(2) (a).
or
employ []"
an
makes it
"unfair
For the same reasons stated
above, Defendants have not demonstrated that the court should read
"unfair" any more narrowly than under the FTC Act .
As a result ,
Defendants ' motion to dismiss the Iowa consumer protection claim
wil l be denied.
III . CONCLUSION
For the reasons stated,
IT IS THEREFORE ORDERED that Defendants ' motions to dismiss
(Docs. 94 , 99) are DENIED.
Isl
Thomas D. Schroeder
United States District Judge
January 12, 2024
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Case 1:22-cv-00828-TDS-JEP Document 160 Filed 01/12/24 Page 88 of 88
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