Medicare's Part D subsidized prescription program was scheduled to go into effect on January 1, 2006. Participation proposals from health insurance companies for were due in August of 2005. Both UnitedHealth Group ("United"), a very large national health insurance company, and PacifiCare, a small California health insurance company, were independently preparing their proposals in early 2005. At the same time, however, they were engaged in merger discussions. By mid-2005, they were meeting regularly and exchanging information. A successful Part D proposal had to demonstrate access to a network of pharmacies adequate to serve the program's participants. In furtherance of that requirement, both United and PacifiCare were in discussions with Omnicare, the largest institutional pharmacy in the country. United’s efforts were successful. Although it had some concerns regarding Omnicare's contract terms, it entered into a reimbursement contract with a reimbursement rate comparable to that Omnicare offered others. PacifiCare's negotiations fared less well. Ultimately, PacifiCare submitted its Part D proposal without an Omnicare deal. The formal merger agreement was signed in early July and the companies continued their meetings and information exchange. In September, they collaborated on a strategic options memorandum addressing the integrated company's options with respect to PacifiCare's wholly-owned pharmacy benefits manager subsidiary. At some point, Omnicare became concerned that patients who were insured by PacifiCare but located in facilities exclusively managed by Omnicare would not have access to their prescriptions once the program began. An Omnicare employee even sent an e-mail to United, asking if PacifiCare would be included in the United contract when their deal closed. United replied that PacifiCare would follow its own Part D strategy even if the deal closed. Concerned that it would not be able to service PacifiCare insured, Omnicare reopened the contract negotiations. PacifiCare offered the same deal that it had offered earlier -- Omnicare accepted it without negotiations or counteroffers. In doing so, it agreed to a reimbursement rate significantly lower than that it had received from United. Shortly after Omnicare entered into that contract, United informed Omnicare of its concerns regarding the collateral contract terms and reopened their negotiations. By the time those negotiations stalled, the merger was complete. United advised Omnicare that it would operate under the PacifiCare agreement. Omnicare filed suit against United, PacifiCare, and the PacifiCare subsidiary. It alleged violations of the Sherman Act and the Kentucky Consumer Protection Act as well as claims of fraud, conspiracy, and unjust enrichment. Judge Pallmeyer (N.D. Ill.) granted the defendants' motions for summary judgment. Omnicare appeals.

In their opinion, Seventh Circuit Judges Kanne and Tinder and District Judge Griesbach affirmed. Section 1 of the Sherman Act prohibits agreements that unreasonably restrain trade, including agreements to fix prices. Price fixing agreements are usually between or among sellers but buyers can violate Section 1 as well. To succeed on a Section 1 claim, a plaintiff must show an agreement among the defendants, an unreasonable restraint of trade, and an injury. The district court concluded that Omnicare never got past the first element in that it failed to produce evidence of any concerted action by the defendants that was inconsistent with lawful conduct. Conduct that is as consistent with lawful competition as it is with an illegal conspiracy does not, by itself, allowing an inference of an antitrust violation. The Court noted that it would apply the Market Force two-part test. First, it determines whether the evidence is equally consistent with permissible and improper conduct. If so, it searches for other evidence that would seem to exclude the notion of independent actions. Within that framework, the Court analyzed the evidence: the strategic options memorandum, the information exchange, the prohibition on PacifiCare's incurring major contract liability, PacifiCare's negotiating tactics, the e-mails regarding whether PacifiCare would be included under the United contract, the different reimbursement rates, and United's conduct after Omnicare signed the PacifiCare agreement. In each case, the Court either concluded that the evidence did not equally support an inference of unlawful conduct or, if it did, there was little evidence to exclude the possibility of independent behavior. It also concluded that the evidence, when viewed together, was more supportive of a lawful inference that a conspiratorial one, particularly when viewed in light of the Part D chronology and Omnicare's own role in the events. The Court turned to the state law claims. The fraud claim was based exclusively on United's e-mail concerning PacifiCare's Part D strategy. At most, however, the e-mail is a statement of intent regarding future conduct. Illinois law requires that such statements be part of a scheme to defraud. Since the Court found no such scheme, the common law fraud claim cannot prevail. Likewise, the unjust enrichment claim is based on the allegations of illegal conspiracy. Since the Court found no such conspiracy, that claim fails as well.