Antitrust Law Daily Wrap Up, ANTITRUST—NDCal: Egg Donors State Sherman Act Claims Against Reproductive Services Companies , (Apr 9, 2013)

By Jody Coultas, J.D.

Individuals that sold human egg donor services directly to Society for Assisted Reproductive Technology (SART) fertility clinics stated Sherman Act claims against SART and the American Society for Reproductive Medicine (ASRM) based on a horizontal price-fixing agreement among purchasers of human egg donor services, according to the federal district court in Oakland (Kamakahi v. American Society for Reproductive Medicine, March 29, 2013, Armstrong, S.).

ASRM set a maximum compensation its members should pay for donor services, and SART adopted the maximum price rules. The sellers alleged that the SART-member fertility clinics agreed amongst themselves to follow the rules, which constituted a contract, combination, and conspiracy in restraint of trade. The sellers sought to represent all women who sold donor services for the purpose of supplying their own eggs directly to any SART member that was either a signatory to an agreement to abide by the pricing rules or otherwise agreed to adhere to such rules on donor egg compensation during the class period.

In order to establish a claim under Section 1 of the Act, a plaintiff must demonstrate that there was a contract, combination, or conspiracy, that the agreement unreasonably restrained trade under either a per se rule of illegality or a rule of reason analysis, and that the restraint affected interstate commerce.

Per se illegality.The reproductive assistance companies’ motion to dismiss the antitrust claims predicated on a per se theory of liability was denied by the court. The companies argued that the sellers did not allege a cognizable legal theory because the restraint on trade alleged should be analyzed under the rule of reason rather than under the per se rule of illegality. Restraints that are per se unlawful include horizontal agreements among competitors to fix prices or to divide markets. The sellers alleged sufficient facts to state a claim. The companies’ argument that the per se analysis did not apply was premature.

Rule of Reason. Under the rule of reason analysis, a party must demonstrate that a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful. The analysis also requires allegations of both a product market and geographic market. SART and ASRM argued that the sellers failed to plead sufficient facts to establish a rule of reason claim. The companies failed to show that the alleged market-the market for the purchase of donor services-was unsustainable based on the sellers’ failure to include any substitutes. The sellers also alleged facts supporting their contention that the relevant geographic market was national in scope. The companies could not show that a national geographic market was unsustainable.

The case is No. C 11-01781 SBA.

Attorneys: Bryan L. Clobes (Cafferty Clobes Meriwether & Sprengel LLP) for Lindsay Kamakahi. Megan Dixon (Hogan Lovells US LLP) for American Society for Reproductive Medicine.

Companies: American Society for Reproductive Medicine; Society for Assisted Reproductive Technology

Cases: Antitrust CaliforniaNews