Antitrust Law Daily Wrap Up, TOP STORY—N.D. Cal.: Municipality’s “umbrella damages” not speculative in antitrust claim over blood plasma supply, (Aug 22, 2014)

By Linda O’Brien, J.D., LL.M.

A municipality’s Cartwright Act claims against two manufacturers of pharmaceutical products and a trade association for allegedly engaging in a conspiracy to reduce the supply of human blood plasma products, which in turn caused artificially inflated prices for those products throughout the market, were not unduly speculative, the federal district court in San Francisco has held (County of San Mateo v. CSL Limited, August 20, 2014, Corley, J.).

CSL Limited and Baxter International manufacture plasma-derivative protein therapies (IVIG) and albumin that are derived from human blood plasma collected from donors and sellers at collection centers. The therapies, which are necessary to treat several life-threatening medical conditions, are sold to healthcare providers or distributors. CSL and Baxter control approximately 60 percent of the U.S. market for IVIG. The County of Mateo purchased IVIG and albumin from a healthcare distributor.

The County filed suit against CSL, Baxter, and the trade group Plasma Protein Therapeutics Association, alleging violations of California’s Cartwright Act. The plaintiff asserted that the defendants conspired to reduce the supply of plasma-derivation protein therapies. The conspiracy caused artificial shortages of IVIG and albumin, which in turn caused inflated prices for those therapies that were paid by the County. Although the majority of IVIG and albumin purchased by the County was manufactured by companies that are not alleged to have participated in the conspiracy, the County alleged that the purchases were made at supracompetitive prices caused by the defendants’ conspiracy to reduce supply. The defendants moved for summary judgment.

The court found that the plaintiff’s claim of “umbrella damages” were not unduly speculative under the Cartwright Act as a matter of law. The County asserted that the defendants’ conspiracy to decrease supply created a price umbrella that spread the artificially inflated price throughout the market. In rejecting the defendants’ argument that calculating the overcharge was unacceptably speculative, the court noted that the overcharge damages from purchases from non-conspirators would be the same calculation made for damages from purchases from the defendants. Although the calculation may be inherently difficult, it was not impossible for the plaintiff to make a non-speculative estimation of such damages.

It also was not impossible for the plaintiff to establish with a reasonable probability that the defendants’ supply restriction caused a price umbrella, which in turn caused the plaintiff to incur an overcharge when purchasing IVIG and albumin from non-conspirators, according to the court. Moreover, umbrella damages were not categorically barred under the Cartwright Act for failure to meet the benchmark for speculation and complexity under the Supreme Court decision in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977).

Finally, the defendants failed to show that the plaintiff lacked standing under the Cartwright Act. It was undisputed that the County was a participant in the relevant market and its injuries caused by the alleged price umbrella were antitrust injuries. Also, the plaintiff’s umbrella damages claim was not inherently speculative, there was no risk of duplicate recovery given the lengthy procedural history of the case, and apportioning damages to the plaintiff was not impermissibly complex. Thus, the defendants did not show that the plaintiff lacked standing as a matter of law, the court concluded.

The case is No. 10-cv-05686-JSC.

Attorneys: Stuart George Gross (Cotchett, Pitre & McCarthy, LLP) for County of San Mateo. Kevin J. Arquit (Simpson Thacher & Bartlett LLP) for CSL Ltd. David John Zott (Kirkland and Ellis LLP) for Baxter International Inc. Allison Shirlene Brehm (Kelley Drye Warren LLP) for Plasma Protein Therapeutics Association.

Companies: CSL Limited; Baxter International Inc.

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