FTC’s Cancer Detection Antitrust Suit Transferred To California Southern District
04/28/2021On April 20, 2021, the United States District Court for the District of Columbia granted defendants’ motion to transfer a motion for preliminary injunction brought by the Federal Trade Commission (“FTC”) alleging that defendants’ plans to enter into a merger agreement violated Section 5 of the FTC Act and Section 7 of the Clayton Act. Federal Trade Commission v. Illumina, et al., No. 21-873 (D.D.C. 2021). The Court found that the U.S. District Court for the Southern District of California was a more appropriate venue for litigation of the case on the basis that it would be easier for most of the witnesses to get to that district, among other factors. Preliminary injunction hearings are currently set for August 24, 2021.
Defendants are Illumina, Inc. and GRAIL, Inc., which offer genetic sequencing products that serve as a key component of life-saving, multi-cancer early detection tests. These tests, which sequence DNA from a patient’s bodily fluids, can be used to screen up to fifty types of cancer. Illumina—which the FTC alleged produces more than 90% of the world’s sequencing data—founded GRAIL in 2015, and subsequently reduced its shares to below 20% in 2017. Since then, GRAIL has developed an early detection test for cancer called “Galleri” that is presently seeking FDA approval. Due to vertical concerns about harm to competition in the U.S. multi-cancer early detection test market, the FTC initiated an administrative adjudication process and filed a preliminary injunction in court against Illumina’s plans to acquire the remaining 85.5% of GRAIL’s shares.
In deciding the proper venue for the preliminary injunction decision, the District Court for the District of Columbia considered COVID-related issues as well as traditional venue factors of private and public interest. The Court rejected the FTC’s presumption that an in-person proceeding was not necessary and therefore issues of location and safety of travel should bear little weight in deciding venue. Rather, the Court cited past precedent and noted that “significantly, ‘[l]ive testimony is . . . markedly preferable’ to remote testimony,” for evaluating witness credibility, review of the evidence, and flow of the proceedings. Id. at 5-6. Citing recent news of the COVID-19 vaccine rollout process, the Court found that in-person or hybrid proceedings would likely be possible at the time of the scheduled hearings in late summer and therefore worth considering in its transfer decision.
Private interest factors determining venue included (1) plaintiff’s choice of forum; (2) defendant’s preferred forum; (3) the location where the claim arose; (4) the convenience of parties; (5) the convenience of witnesses; and (6) ease of access to evidence. Although the Court acknowledged that deference should be accorded to the FTC’s choice of the District of Columbia venue, the Court found that, on balance, these factors weighed strongly in favor of transfer to the Southern District of California. Both defendants are headquartered in California, with almost all employees and third-party witnesses residing there, as well as the merger at issue having been negotiated there. Moreover, deference to plaintiff’s forum as a factor should be weighed less where the “factual nexus between the case and the plaintiff’s chosen forum” is “insubstantial,” as was the case here. Id. at 12. Because the alleged anticompetitive effects of the merger would have a nationwide impact, the Court found that both forums had an equal connection in an antitrust sense. Finally, the Court found public interest factors including the local interest in a local matter, the Courts’ familiarity with the applicable law, and relative congestion of the courts were neutral as to the choice of venue.