On November 5, the United States Court of Appeals for the Eighth Circuit upheld the Eastern District of Missouri’s class certification in a urological catheter antitrust suit. On September 22, the federal district court granted class certification in a case against C.R. Bard, the largest producer of urological catheters in the United States. The plaintiffs, Southeast Missouri Hospital (SMH) and St. Francis Medical Center (St. Francis), allege that C.R. Bard engaged in anticompetitive conduct in violation of federal and state antitrust law. Though the district court granted class certification, it refused Southeast Missouri Hospital the right to represent the class, leaving St. Francis Medical Center to continue the class action alone.
The plaintiffs allege that Bard used its market power to keep its competitor, Rochester Medical Corporation, from entering the urological catheters market. Like most hospitals in the United States, the plaintiffs negotiate purchases of medical supplies through a Group Purchasing Organization (GPO). According to SMH and St. Francis, Bard used this dynamic to maintain its market share: It engaged in exclusive dealing contracts that required GPOs to solely purchase urological products from the defendant and penalized member hospitals that purchased products elsewhere; it entered market-share maintenance contracts with GPOs, offering discounts to hospitals that purchased mostly Bard products; and it used a bundled pricing scheme, offering discounts to hospitals that purchased (usually) 90% of its urological products and (usually) 90% of its need for other unrelated products from Bard. The plaintiffs allege that, combined, these three policies created a significant barrier to entry for Rochester Medical Corporation, a relatively small company.
According to the plaintiffs, this exclusionary conduct artificially inflated the price of urological catheters. They sued on behalf of themselves and sought class certification, asserting that the defendant’s conduct injured all entities that purchase urological catheters directly from Bard through GPOs. The district court agreed, and certified two classes, one class for entities across the United States and a second for entities in Missouri.
In granting class certification, the Eastern District of Missouri held that St. Francis satisfied the legal requirements necessary to become a class representative. Specifically, it found: (1) the class of plaintiffs is so numerous that it would be impractical to combine all the cases through joinder; (2) there are questions of law and fact common to all members of the class; (3) St. Francis’ claims and defenses are typical of the claims and defenses of the rest of the class; and (4) St. Francis is capable of fairly and adequately representing the other members. Furthermore, the court held that class certification is appropriate because common questions of law and fact predominate any unique questions that may affect individual class members.
But the Eastern District’s decision was not a complete victory for the plaintiffs. While confirming representative status for St. Francis, the court held that Southeast Missouri Hospital could not represent the class. At a previous hearing, the court had decided that the plaintiffs could only assert claims arising on or after February 21, 2003. Here, the court noted that SMH had not purchased catheters from Bard since 2001. Accordingly, the hospital shared neither the interests nor the injuries of the class, and could not represent it.
The district court also struck the plaintiff’s claim that Bard had disparaged its competitor. The court noted that St. Francis lacked standing because no representative of the remaining plaintiff had witnessed the alleged conduct. It also reasoned that the claim is inappropriate in a class action suit because it would require each class member to prove the specific facts of case-by-case misrepresentations.
A trial has been set for April 2009.