United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS December 5, 2003
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
______________________
No. 02-31084
_______________________
INFUSION RESOURCES, INC. AND
DIABETES RESOURCES, INC.,
d/b/a INSULIN INFUSION SPECIALTIES,
Plaintiffs-Appellants,
versus
MINIMED, INC.,
Defendant-Appellee.
_________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
Before HIGGINBOTHAM, STEWART, and PRADO Circuit Judges.
CARL E. STEWART, Circuit Judge:
Appellants Infusion Resources, Inc. and Diabetes Resources, Inc., d/b/a Insulin Infusion
Specialties (“IIS”) appeal the decision of the district court granting Appellee Minimed, Inc.’s
(“Minimed”) motion for summary judgment dismissing IIS’s following causes of action: price
discrimination claims under the Robinson-Patman Act (“RPA”), 15 U.S.C. § 13(a)/§ 2(a) Clayton
Act, and the Louisiana Price Discrimination Act (“LPDA”), La. R.S. § 51:331; a claim for lack of fair
dealing under the Louisiana Unfair Trade Practices Act (“LUTPA”), La. § 51:1409; and claims for
breach of the implied duty of good faith, breach of contract, defamation and violation of trade secrets.
IIS also appeals the district court’s denial of its Fed. R. Civ. P. 59(e) motion for reconsideration.
For the reasons that follow, we affirm the judgment of the district court.
FACTUAL AND PROCEDURAL BACKGROUND
Minimed is the world’s largest manufacturer of insulin infusion pumps. MiniMed’s United
States pump therapy market share is approximately 80%. According to MiniMed, between the years
1996 to 2001, users of insulin pumps increased from about 6,000 to about 54,000 nationwide.
MiniMed pumps have a list price of $4,995, and a patient may expect to expend over $2,000 per year
for the complementary disposable items associated with the pump.
IIS conducted business as an insulin pump distributor and related supplies to end-users for
at least two of MiniMed’s competitors. In the Fall of 1994, IIS informally became a distributor of
MiniMed’s pumps. In July 1997, the two parties entered into a formal written Distribution
Agreement (the “Agreement”), which provided that California law would govern, granting IIS a non-
exclusive right to sell and distribute MiniMed products. The Agreement also bestowed upon IIS the
ability to purchase the pumps from MiniMed at the highest available discount, up to 29%, depending
on IIS’s overall purchase volumes. Additionally, IIS agreed to promote MiniMed and its products
and maintain adequate facilities and personnel to do so, as well as provide training to pump
purchasers and pay all costs to deliver products to end users. IIS also agreed, with one exception1,
to market MiniMed’s products exclusively and that it would not directly or indirectly manufacture,
1
This exception provided:
To the extent customers of IIS requested infusion sets not manufactured or
distributed by Minimed, IIS may carry such infusion sets to fill orders expressly
requested by customers; provided however, that all such infusion sets other than
those manufactured by or for MiniMed which are distributed by IIS shall not
exceed an aggregate of 20% of all such sets (determined by retail sale price)
distributed by IIS in any calender year.
2
distribute or market products which compete directly or indirectly with products manufactured by
MiniMed. The Agreement did not grant IIS an exclusive distributorship and MiniMed was expressly
allowed both to sell its products in the territories served by IIS, and to utilize other distributors. The
Agreement contained an annual renewal clause, which allowed either party to decline renewal of the
Agreement, with or without cause, on thirty days written notice prior to the end of the current
calendar year.2
The parties operated under the Agreement from July 17, 1997 until December 31, 1998 during
which time IIS received a 29% discount off of the list price on MiniMed pumps. On November 23,
1998, MiniMed sent IIS written notice that it was not going to renew the Agreement for the 1999
calender year, and the Agreement terminated on December 31, 1998. MiniMed indicated to IIS that
it was willing to continue selling pumps to IIS at the full list price. On January 29, 1999, IIS
purchased a single MiniMed pump at the full list price of $4,995 which was shipped from California
to Louisiana. IIS submitted unrebutted evidence that between January 1, 1999 and February 4, 1999
MiniMed sold, across state lines, other distributors the same type of pump for $3,996. IIS also
submitted an invoice which showed that one of these distributors was a company named “Secure
Care”, which the district court assumed was Secure Care Medical, an entity named by IIS as a
MiniMed distributor in the South.
IIS initiated an action in November, 1998, in which it claimed that MiniMed breached the
Agreement by both wrongfully passing IIS confidential and proprietary information to MiniMed
salespersons and by making intentional and material misrepresentations to IIS’s customers in order
2
IIS’s contractual distribution territory per the Agreement included Louisiana, Texas, Arkansas, Ohio,
Pennsylvania, New York, Connecticut, New Jersey, Utah, Virginia, North Carolina and Mississippi.
3
to divert sales from IIS to MiniMed. IIS also complained that MiniMed acquired IIS’s two main
distribution competitors and unfairly manipulated the wholesale prices at which it sold its products
to IIS, in order to hinder IIS’s ability to compete with MiniMed or MiniMed-owned distributors.3
IIS sought damages pursuant to MiniMed’s alleged price discrimination, unfair trade practices,
breach of contract and implied obligation of good faith , trade secrets violations, defamation, and
detrimental reliance. On March 8, 1999, MiniMed timely removed the case and filed a cross motion
for summary judgment to dismiss all of IIS’s claims, which the district court granted.
IIS now appeals and argues that the district court erred in: (1) dismissing IIS’s price
discrimination claims by finding that there were no disputed facts regarding whether IIS engaged in
actual competition with any favored resellers of MiniMed; (2) dismissing IIS’s LUTPA claim; (3)
excluding IIS’s expert evidence regarding the damages it suffered as a result of MiniMed’s conduct;
(4) dismissing IIS’s breach of contract and implied duty of good faith, defamation and fair dealing
claims; (5) denying IIS’s 59(e) motion for reconsideration of its order granting MiniMed summary
judgment dismissing of all of IIS’s claims; and (6) dismissing IIS’s price discrimination claims by
finding that IIS failed to present evidence of actual injury.
DISCUSSION
I. Standard of Review
This Court reviews a district court’s grant of summary judgment de novo. Am. States Ins.
Co. v. Synod of the Russian Orthodox Church Outside of Russia, 335 F.3d 493 (5th Cir. 2003).
3
IIS submitted MiniMed’s 1999 10-K report filed with Securities and Exchange Commission which stated
that in 1998 MiniMed had acquired two distributors named HMS and DSS. In the report MiniMed allegedly stated “By
increasing our ability to satisfy more of our customers’ needs and continuing our extensive customer service efforts,
we believe we can maximize our revenues over the long term and create barriers to entry for competitors.” IIS,
however, did not offer any evidence as to what specific geographic areas these two distributors operated in.
4
Summary judgment is appropriate only if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56
©); Tango Transp. v. Healthcare Fin. Servs. LLC, 322 F.3d 888, 890 (5th Cir. 2003). A genuine
issue of material fact exists if the record, taken as a whole, could lead a rational trier of fact to find
for the non-moving party. Id. Questions of law are reviewed de novo. Id.
II. Price Discrimination Robinson-Patman Act, 15 U.S.C. § 13(a)/§ 2(a) Clayton Act4
In order to recover damages for a claim under §13(a) of the Robinson-Patman Act
(RPA)/§2(a) Clayton Act claim, a plaintiff must prove four facts: one, sales made in interstate
commerce; two, the commodities sold to IIS were of the same grade and quality as those sold to
other purchasers; three, MiniMed discriminated in price between IIS and other purchasers; and four,
that the discrimination had a prohibited effect on competition. Lycon Inc. v. Juenke, 250 F.3d 285,
288 (5th Cir.), cert. denied, 122 S. Ct. 209 (2001). RPA §13(a) includes two basic types of injury,
primary line and secondary line. Eximco, Inc. v. Trane Co., 737 F.2d 505, 515 (5th Cir.), reh’g
granted in part, amended in part on other grounds, 748 F.2d 287 (5th Cir. 1984). Secondary-line
injury, which IIS claims to have incurred, results from price discrimination between favored and
disfavored buyers. Texaco, Inc. v. Hasbrouck, 496 U.S. 543, 558 n. 15 (1990).
4
Section 2(a) of the Clayton Act, as amended by RPA, 15 U.S.C. § 13(a) provides in pertinent part:
It shall be unlawful for any person engaged in commerce, in the course of such
commerce, either directly or indirectly, to discriminate in price between different
purchasers of commodities of like grade and quality , where either or any of the
purchases involved in such discrimination are in commerce, where such
commodities are sold for use, consumption, or resale within the United States...and
where the effect of such discrimination may be substantially to lessen competition
or tend to create a monopoly in any line of commerce, or to injure, destroy, or
prevent competition with any person who either grants or knowingly receives the
benefit of such discrimination, or with customers of either of them...
5
The district court held that while IIS met its burden on elements one and two, it failed to show
element three, that MiniMed discriminated in price between IIS and other purchasers, and dismissed
IIS’s claim at that point. The district court did not reach element four.
Under element three a plaintiff “must first prove that as the disfavored purchaser, it was
engaged in actual competition with the favored purchaser(s) as of the time of the price differential”
and that this “competitive nexus requirement is satisfied when t here is a showing of ‘competitive
contact’ between the recipients of the price differential.” Best Brands Beverage, Inc. v. Falstaff
Brewing Co., 842 F.2d 578, 584 (2d Cir. 1987). In other words it “must therefore be shown that
as of the time the price differential was imposed, the favored and disfavored purchasers competed at
the same functional level, i.e., all wholesalers or all retailers, and within the same geographic market.”
Id. at 585. This Court has explained that “competition is determined by careful analysis of each
party’s customers. Only if they are each directly after the same dollar are they competing.” M.C.
Mfg. Co. v. Texas Foundries, Inc., 517 F.2d 1059, 1065 (5th Cir. 1975).
In concluding that IIS failed to satisfy element three, the district court noted that IIS’s claim
that it was one of MiniMed’s top three distributors in the United States and that it was competing
nationwide with MiniMed’s other distributors, even if true, does not necessarily indicate that the
markets of these distributors overlapped. The district court found t hat IIS did not specifically
demonstrate any evidence showing that it directly competed with any of MiniMed’s other distributors
for “the same dollar” nationwide. The district court noted that while IIS did proffer some evidence
that prior to the alleged price discrimination it competed with at least one reseller, Secure Care
Medical, in the South, and that an entity named National Diabetes Pharmacy distributed MiniMed
products in Virginia, it had not specifically pointed to any evidence that at the time of the alleged
6
price discrimination that it was competing with these entities or any other entity in a particular
market.
IIS asserts that the evidence it presented - that before and after January 1, 1999, it
competed with other MiniMed distributors for customers - was sufficient to meet its “competitive
nexus burden” and preclude the district court’s granting of MiniMed’s motion to dismiss for IIS’s
failure to meet element three of its §13(a) RPA claim. IIS also asserts that the district court
acknowledged that it submitted evidence that IIS competed with at least one other reseller, Secure
Care Medical, in the South. Furthermore, IIS submitted evidence that another entity, National
Diabetes Pharmacy, distributed MiniMed pumps IIS’s territory of Virginia.
After reviewing the facts on the record and their application to the law, we hold that the
district court was correct in its conclusion in regards to element three. The competitive nexus is
established if the disfavored purchaser and favored purchaser compete at the same functional level
and within the same geographic market at the time of the price discrimination. Best Brands, 842 F.2d
at 585. IIS has established that both Secure Care Medical and National Diabetes Pharmacy compete
at the same functional level as IIS, i.e., they are all retail sellers of MiniMed’s pumps. Additionally,
IIS established, at least in respect to National Diabetes Pharmacy, a MiniMed distributor in Virginia,
that it operated in the same geographic market because Virginia was one of IIS’s contractual
territories. IIS, however, has not submitted evidence that either Secure Care Medical or National
Diabetes Pharmacy qualified as “favored purchasers” at the time of the alleged price discrimination,
when the Agreement with MiniMed was no longer in effect. See M.C. Mfg., 517 F.2d at 1065.
Thus, IIS has not shown actual competition with a favored purchaser at the time of the alleged price
discrimination and has failed to meet its burden on this element.
7
III. Price Discrimination, Louisiana Price Discrimination Act, La. R.S. § 51:331
The district court also dismissed IIS’s price discrimination claim under the LPDS, La. R.S.
§ 51:331 for the same reasons it dismissed the RPA claim, because IIS failed to show actual
competition with a favored purchaser at the time of the alleged price discrimination, and thus failed
to meet its burden. The district court also noted that the language of the statute clearly indicated that
the Louisiana legislature intended to address discriminatory pricing “in the state” and IIS failed to
show any favored distributors it competed with in Louisiana.
IIS’s federalism argument in which it contends that even if its federal RPA claim is dismissed
it is still entitled to a state claim under the LPDS, La. R.S. § 51:331 is incorrect. IIS bases this
argument on its assertion that the district court dismissed IIS’s claim under LPDS simply because it
found that IIS’s federal antitrust claim under the RPA failed.
This is not a correct understanding of the district court’s reasoning for dismissing IIS’s LPDS
claim. The district court clearly stated that it analyzed IIS’s claim under LPDS, and whether IIS
established the elements for such claim. The district court found that the Louisiana legislature
intended the statute to address discriminatory pricing “in the state” and IIS failed to set forth specific
evidence that MiniMed had charged IIS a different price than it charged any other pump distributor
in Louisiana, at the time of the alleged price discrimination. Therefore, the district court held that
IIS’s claim failed. Our review of the record finds no evidence of IIS competing with any other pump
distributor in Louisiana at the time of the alleged price discrimination, and therefore the district court
was correct in dismissing IIS price discrimination claim under the LPDS.
IV. Louisiana Unfair Trade Practices Act, La. § 51:1409
8
The district court found that because MiniMed validly effectuated the non-renewal of the
Agreement pursuant to the non-renewal clause, evidence submitted by IIS relating to damages from
non-renewal of the Agreement would be excluded. The district court also held that MiniMed was
not liable for damages under the LUTPA, La. R.S. § 51:1409, which precludes entitlement to
damages for non-renewal of an agreement as well as price discounts, and therefore any such evidence
presented by IIS for damages under the LUTPA was irrelevant and must be excluded. Turner v.
Purina Mills, Inc., 989 F.2d 1419, 1423-24 (5th Cir. 1993). The district court therefore dismissed
IIS’s LUTPA claim.
IIS argues that it submitted sufficient evidence in the form of MiniMed memoranda showing
that MiniMed violated the LUTPA. These memoranda allegedly contain statements made by
MiniMed showing it intended to do harm to IIS in violation of the LUTPA.5 The district court held
that Turner precluded damages pursuant to a LUTPA claim when the damages were tied to either a
non-renewal of an agreement or price discounts, as was the case here. See 989 F.2d at 1423-24.6
IIS argues that its case is distinguishable from Turner and is more analogous with Chemical
Distribs., Inc. v. Exxon Corp., 1 F.3d 1478 (5th Cir. 1993), and notes that this Court distinguished
Purina because unlike the claimant in that case, in Exxon, the jury found that Exxon had breached its
contract in bad faith, there was sufficient evidence of fraud, misrepresentation, or deception, and there
5
IIS points to the record to show that MiniMed made the following statements in memoranda such as: “pull
trigger”; “put IIS on a leash”; and “weaken or destroy them”.
6
In Turner, 989 F.2d at 1420, the plaintiff was a Purina dealer whose agreement was terminated by Purina
pursuant to a non-renewal provision after his sales fell. The dealer then brought suit under the LUTPA and introduced
into evidence an internal Purina memoranda which stated that Purina planned to eliminate his business as a major
competitor in the relevant markets. Id. at 1420-21. This Court held that Purina did not violate the LUTPA since its
termination of the contract was valid, and “an intent to eliminate the competition does not by itself violate LUTPA.
Rather, the statute forbids businesses to destroy each other through improper means.” Id. at 1423. Finally, this Court
held that the LUTPA does not provide an alternative remedy for simple breaches of contract. Id. at 1422.
9
were internal memoranda prepared before the contracts was terminated. Id. at 1485-86.
This Court in Exxon, however, stated that Exxon differed from Turner in that the latter dealt
with a suit between a dealer and a supplier, and part of the decision in that case rested on its analysis
of the relationship between the two. Id. at 1485. Exxon, in contrast, dealt with a supplier (the
plaintiff) - customer (Exxon) relationship and outlined conduct allegedly perpetrated by Exxon that
IIS does not allege of MiniMed in this case. Id. Such conduct by Exxon included: conspiring with
the plaintiff’s supplier to eliminate the plaintiff, refusing in bad faith to pay plaintiff’s invoices, and
unlawfully seizing the plaintiff’s equipment. Id. This Court in Exxon did not indicate that any part
of Turner had been invalidated. Because IIS’s case significantly resembles Turner more than it does
Exxon, the district court’s holding that there were no actionable LUTPA claims was correct.
V. IIS’s damage report and remaining non-antitrust claims
Once the district court found that IIS had failed to establish the required elements for any of
its antitrust claims, and dismissed those claims, it held that the February 5, 2002 damage report
submitted by IIS became defective as support for its remaining non-antitrust claims because the report
failed to segregate between Minimed’s allegedly wrongful antitrust and non-antitrust conduct, and
the specific damages that flowed from each.7 The district court then granted IIS leave to file an
amended damage report which listed only those damages caused by the non-antitrust conduct. IIS
submitted an amended damage report dated May 19, 2002. The district court reviewed the amended
report and granted Minimed’s motion to strike the report because it held that IIS simply repackaged
its original report, which claimed its damages flowed from Minimed’s antitrust conduct, to assert that
7
These remaining claims were (1) detrimental reliance, (2) breach of contract and the implied obligation of
good faith and fair dealing under California law, (3) defamation under Louisiana law, and (4) unfair trade practices.
10
essentially the same damages now flowed from the remaining non-antitrust claims.8 Upon striking the
amended damage report the district court also granted Minimed’s summary judgment motion to
dismiss IIS’s remaining non-antitrust claims.
The district court was correct to strike the amended report because it did not properly reflect
the true amount of estimated damages which flowed from the remaining non-antitrust claims, making
the report seriously flawed and inadmissible. City of Vernon v. S. Cal. Edison Co., 955 F.2d 1361,
1371-73 (9th Cir.), cert. denied, 506 U.S. 908 (1992) (affirming summary judgment for defendant
because of, inter alia, plaintiff’s failure to properly prove damages where plaintiff did not attempt to
or offer to correct the only possibly admissible damages study).
Furthermore, IIS’s argument that the disaggregation rule is only required in antitrust cases,
and thus became non-applicable once its antitrust claims were dismissed, is incorrect.9 This Court
has not limited the concept of disaggregation merely to antitrust actions. See, e.g. Perrone v. General
Motors Acceptance Corp., 232 F.3d 433 (5th Cir. 2000) (actual damages for violation of the Truth
in Lending Act requires direct causal relationship between the amount of damages and injury or
harm); National Papaya Co. v. Domain Industries, Inc., 592 F.2d 813, 818 (5th Cir. 1979) (in a
8
IIS’s February 5, 2002 expert damage report used a projection of future earnings model to calculate its
damages resulting from the change in commercial relationship between MiniMed and IIS. When IIS subsequently
submitted its May 19, 2002 amended damage report, it again used the projection of future earnings model, but then
attributed the same damages to its remaining non-antitrust claims.
9
To support this argument IIS cites Spray-Rite Serv. Corp. v. Monsato Co., 684 F.2d 1226, 1243 (7th Cir.
1982), aff’d, 465 U.S. 752 (1984); ILC Peripherals Leasing Corp. v. IBM Corp., 458 F. Supp. 423, 434 (N.D. Cal.
1978), aff’d sub nom. Memorex Corp. v. IBM Corp., 636 F.2d 1188 (9th Cir. 1980), cert. denied, 452 U.S. 972 (1981).
However, while these cases do hold that disaggregation generally applies to antitrust claims, none of them held that
disaggregation is only required in antitrust cases. Furthermore, Minimed cites to non-antitrust cases held that
disaggregation of damages does apply to other than antitrust claims. Fleet Nat’l Bank v. Anchor Media Television, Inc.,
45 F.3d 546, 560 (1st Cir. 1995) (“The law...requires that a party prove, as an element of its case, the extent to which
it was damaged by the fraud or breach”); Doe v. United States, 976 F.2d 1071, 1085-1086 (7th Cir. 1993)(“the trial
court did not abuse its discretion in finding that a causal relationship was insufficiently established”).
11
breach of warranty claim the plaintiff has the burden to show that it’s lost profit damages flowed as
the natural and proximate result of the defendant’s wrongful conduct).
Because IIS merely repackaged its original damages report, and submitted it as an amended
report to support its remaining non-antitrust claims, the district court was correct to exclude it. Once
the amended damages repo rt was excluded, IIS could not show any damages resulting from its
remaining non-antitrust claims. Therefore, the district court was correct in dismissing these remaining
claims because IIS had failed to submit proper proof of damages.
VI. Treble damages under § 4 of the Clayton Act
The district court concluded that because IIS had failed to carry its burden against MiniMed’s
summary judgment motion under element three, it need not address alternative arguments for
dismissal. MiniMed argued alternatively that IIS failed to show element four of its § 13(a) RPA
claim, that the alleged discrimination prohibitively effected competition, by causing harm to IIS, or
that IIS had suffered actual injury under § 2(a) of the Clayton Act for t he purpose of establishing
entitlement to treble damages pursuant to § 4 of the Clayton Act, 15 U.S.C. § 15.
IIS’s argues that all that is necessary to show harm under § 2(a) of the Clayton Act for the
purpose of establishing entitlement to treble damages pursuant to § 4 of the Clayton Act is the
presence of price discrimination. This is incorrect. The Supreme Court in J. Truett Payne Co. v.
Chrysler Motors Corp., 451 U.S. 557, 561 (1981) stated that a showing of price discrimination is
sufficient when seeking an injunction under § 2(a), but not when damages are sought. Because IIS
has failed to show actual injury, it failed to satisfy element four of its § 13(a) RPA claim, as well as
failing to show that it is entitled to treble damages under § 4 of the Clayton Act.
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VII. 59(e) Motion to Reconsider
This Court has held that a 59(e) motion to reconsider should not be granted unless: (1) the
facts discovered are of such a nature that they would probably change the outcome; (2) the facts
alleged are actually newly discovered and could not have been discovered earlier by proper diligence;
and (3) the facts are not merely cumulative or impeaching. See English v. Mattson, 214 F.2d 406, 409
(5th Cir. 1954). The district court held that IIS failed to meet these requirements.
IIS argues that its 59(e) motion for reconsideration of the district court’s decision to grant
MinMed summary judgment should not have been denied because it satisfied the requirements for
reconsideration. Specifically, IIS asserts that it submitted new evidence not available to it at the time
the district court granted summary judgment. The alleged new evidence concerns the names of other
MiniMed distributors who sold MiniMed pumps throughout the United States and specifically in
certain markets that IIS asserted that it was also competing in. IIS argues that this information was
not available to it in a timely manner through no fault of its own but through MiniMed’s refusal to
provide such information during discovery until after its summary judgment motions were granted.
IIS argues that this new evidence would have satisfied element three of its § 13(a) RPA claim.
While the new evidence submitted by IIS may not have been discoverable prior to the district
courts granting of MiniMed’s summary judgment motions, the district court found that it would not
have changed the outcome. The district court reasoned that it did not base its summary judgment
decision on IIS’s failure to show that other distributors competed in certain markets at the time of
the alleged price discrimination. Rather, the district court based its decision on IIS’s failure to submit
sufficient evidence that it also competed in those particular markets during the relevant period, when
its agreement with MiniMed to service particular markets had been terminated as of December 31,
13
1998. Because we have found that IIS failed to submit proof of competition with a favored purchaser
during the time of the alleged price discrimination, the district court’s denial of IIS’s 59(e) motion
for reconsideration was correct.
CONCLUSION
Because IIS failed to submit proof that it competed with favored purchasers in its
geographical area at the time of the alleged price discrimination committed by Minimed, failed to
submit proper proof of damages, and failed to submit evidence sufficient for a reconsideration of the
district court’s grant of summary judgment dismissing all of IIS’s claims, we affirm the decision of
the district court granting Minimed’s motion for summary judgment which dismissed all of IIS’s
claims.
AFFIRM.
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