Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Medline required to provide information in suit between rival medical products distributors, (Nov 24, 2014)

By Jeffrey May, J.D.

The federal district court in Chicago has ordered Medline Industries, Inc. to produce documents and provide deposition testimony in an antitrust suit involving some of its competitors in the so-called “med-surg” market. Medline is not a party to the underlying suit, which is pending in the federal district court in Topeka, Kansas. In response to subpoenas from the litigants in the antitrust dispute, Medline filed a motion to quash pursuant to Federal Rule of Civil Procedure 45. While the court granted the motion in part, Medline was ordered to provide some information (Suture Express v. Cardinal Health 200, LLC, November 18, 2014, Wood, A.).

The underlying suit was filed by Suture Express, Inc. against Cardinal Health 200, LLC and Owens & Minor Distribution, Inc. The parties all compete in the market for medical and surgical single-use items or “med-surg” market. Suture Express claimed that its ability to compete in the market was hampered by the defendants’ tying and bundling practices. The case is now in the discovery phase.

The parties to the underlying suit sought information from Medline. When the litigants and Medline were unable to reach an agreement on the production of documents and deposition testimony, Medline filed the motion to quash both the requests for documents and the requests for deposition testimony in their entireties.

The parties in the underlying litigation subpoenaed Medline for information relating to its customer communications, pricing, sales, and profits, as well as information regarding the terms of Medline’s contracts with its customers, including pricing. In addition, they sought information relating to Medline's tying practices and Medline’s analyses of its competitors’ activities, as well as communications between Medline and its competitors and other Medline documents that referred to its competitors. The burden was on the litigating parties to establish that the information they sought was sufficiently relevant and necessary to the underlying litigation to outweigh the potential harm that the disclosure of sensitive information would cause Medline, the court explained.

In order to satisfy the legitimate needs of the parties in the underlying litigation, the court ordered Medline to produce its aggregate sales data for the years 2006 to present and to designate a deposition witness to speak to the aggregate sales data. Medline also was required to produce redacted versions of eight current contracts with group purchasing organizations (GPOs) along with a random sample of 50 individual or local agreements or contracts between Medline and its customers concerning the sale or distribution of med-surg products.

In addition, Medline was required to produce documents relating to its actual tying agreements, and the parties were permitted to ask a Medline corporate representative questions about documents relating to the actual tying arrangements produced. However, the court granted the motion to quash with respect to documents that discussed potential tying agreements that were never enacted. Medline also was required to produce certain information relating to its communications with and about its competitors, including Suture Express.

The case is No. 14-cv-04737.

Attorneys: Richard Bradshaw Kapnick (Katten & Temple LLP) for Suture Express, Inc. Paula W. Render (Jones Day) for Cardinal Health 200. Shari Ross lahlou (Crowell & Moring LLP) for Owens & Minor Distribution, Inc. James Franklin Herbison (Winston & Strawn LLP) for Medline Industries, Inc.

Companies: Suture Express, Inc.; Cardinal Health 200, LLC; Owens & Minor Distribution, Inc.; Medline Industries, Inc.

Cases: Antitrust IllinoisNews