Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Bone mill monopoly claims against Medtronic fail for second time, (Dec 7, 2015)

By Linda O’Brien, J.D., LL.M.

In an action by a producer of a medical bone mill against medical devices company Medtronic for attempting to monopolize the market for mechanical bone mills used in spinal fusion surgery, the producer failed to present adequate evidence of any agreement among the defendants to obtain a monopoly, the federal district court in Denver has ruled. Therefore, the defendants’ motion for summary judgment was granted (Lenox MacLaren Surgical Corporation v. Medtronic, Incorporated, December 3, 2015, Krieger, M.).

Lenox MacLaren Surgical Corporation developed and produced a medical bone mill for use in spinal fusion surgery. In 2000, the company entered a five-year exclusive supply and license agreement with Medtronic, Inc.’s subsidiary, Medtronic Sofamor Danek USA (Med USA), under which Med USA had exclusive rights to market the mill to hospitals and surgeons for one year. After the license agreement expired, another Medtronic subsidiary, Medtronic PS Medical, began selling a pneumatic bone mill attachment in competition with the Lenox bone mills. Moreover, Med USA initiated a voluntary recall of the Lenox mills after receiving physician complaints. An arbitration panel found in Lenox’s favor on an intentional interference with prospective business relations claim brought against Med USA over the recall.

Having resolved its claims against Med USA, Lenox then filed suit against Medtronic and three other subsidiaries, alleging attempted monopolization in violation of Section 2 of the Sherman Act. In June 2013, the district court granted Medtronic’s motion for summary judgment, dismissing Lenox’s claims. However, in August 2014, the Tenth Circuit reversed the district court’s summary judgment order and remanded the case. Subsequently, the defendants renewed their motion for summary judgment.

Individual liability. The court found that Lenox failed to present adequate evidence of any agreement between any of the defendants and Med USA to obtain a monopoly in the bone mill market. The record contained no written documents, memoranda, or communications that referred to monopolistic plans or strategies. Lenox alleged only general conclusions without meaningful support that all of the defendants conspired to exclude Lenox and monopolize the bone mill market.

It was undisputed that only Med USA entered into the distribution agreement in 2000, the court explained. Lenox also failed to show that any of the named defendants participated in the design, creation, or administration of the Med USA’s distribution of Lenox bone mills under a “loaner program” or that they conspired to do such conduct with a monopolistic intent. Furthermore, Med USA unilaterally recalled the Lenox bone mills, and Lenox failed to show that Medtronic instructed its subsidiaries on “how and what to recall” or was involved in the recall of the Lenox bone mills. Lenox’s evidence of Med USA’s notification to Medtronic of the recall did not establish the existence of a conspiracy between Med USA and Medtronic.

Finally, the defendants demonstrated that the actions giving rise to Lenox’s monopoly claims were each conducted by Med USA. Lenox’s failure to present evidence creating a genuine issue of fact as to whether any of the named defendants were involved in a conspiracy to obtain monopoly power precluded Lenox from contending that the individual defendants were liable under a monopoly theory, the court concluded.

The case is No. 10-cv-02139-MSK-NYW.

Attorneys: Stanley M. Gibson (Jeffer, Mangels, Butler & Marmaro, LLP) for Lenox MacLaren Surgical Corp. Catherine Fairley Spillman (Akin, Gump, Strauss, Hauer & Feld, LLP) for Medtronic, Inc., Medtronic Sofamor Danek, Inc., Medtronic PS Medical, Inc., and Medtronic Sofamor Danek Co. Ltd.

Companies: Lenox MacLaren Surgical Corp.; Medtronic, Inc.; Medtronic Sofamor Danek, Inc.; Medtronic PS Medical, Inc.; Medtronic Sofamor Danek Co. Ltd.

Cases: Antitrust ColoradoNews