-
Northern District Court Rejects Medical Technology Company’s Bid To Limit Scope Of Discovery And Recoverable Damages Of Antitrust Claims Using Motion For Judgment On The Pleadings
01/31/2024On January 17, 2024, Judge Jeremy C. Daniel of the United States District Court for the Northern District of Illinois (Eastern Division) denied defendants’ motion for judgment on the pleadings brought under Rule 12(c) of the Federal Rules of Civil Procedure that attempted to limit the scope of discovery and recoverable damages of antitrust claims brought by plaintiff. Linet Americas Inc. v. Hill-Rom Holdings Inc. et al., No. 21 CV 6890, (N.D. Ill. Jan. 17, 2024).
Plaintiff is a U.S. subsidiary of one of Europe’s largest hospital bed suppliers and Defendant is a U.S. manufacturer and supplier of medical technologies and other health-related products and services, including hospital beds. Plaintiff entered the U.S. hospital bed market in 2020, after which plaintiff alleges that defendant began implementing an anticompetitive scheme against it comprised of, among other things, the use of long-term exclusive dealing contracts, manufacturing hospital equipment that was incompatible with plaintiff’s and other suppliers’ hospital beds, threatening customers, and making disparaging remarks about plaintiff.
In December 2021, plaintiff filed suit alleging that these actions constituted unlawful monopolization, exclusive dealing, exclusionary bundling, and deceptive conduct in violation of the Sherman Act Sections 1 and 2; Clayton Act Section 14; the Illinois Antitrust Act; and Illinois Consumer Fraud Act. Relevantly, plaintiff’s Complaint also invoked certain accrual and tolling doctrines, including the doctrine of fraudulent concealment, the discovery rule, and the continuing violation doctrine, concerning the relevant time period for recovery of damages.
Having already answered the Complaint, defendant moved for judgment of the pleadings. Rule 12(c) provides that “[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings” and applies the same standard as motions to dismiss under Rule 12(b)(6) (but are less common). Defendant did not raise a limitations defense and instead claimed that plaintiff’s affirmative tolling claims, specifically, the discovery rule and doctrine of fraudulent concealment, were insufficiently pled.
First, the Court rejected defendant’s argument that Plaintiff could not invoke the discovery rule to toll the statute of limitations, explaining that the discovery rule is not a tolling doctrine but rather a doctrine of accrual, which is generally a question of fact. Defendant argued that because plaintiff’s Complaint referred to a similar 2015 lawsuit against defendant, it should have been on notice and could have discovered its injury by 2015 at the latest. However, the Court rejected this and distinguished the 2015 case on the basis that it involved different customer groups and different types of agreements that lacked the same “strategic overlay.” Further, although defendant issued press releases and publicly discussed the contracts the subject of the 2015 lawsuit, the Court was not convinced that reasonable investigation would have revealed incriminating evidence sufficient to support an antitrust violation such that the reference in the complaint could “not foreclose that Plaintiff was unable to connect all the dots of Defendant’s alleged scheme until shortly before filing the complaint.” The Court pointed to the fact that the contracts in question contained confidentiality clauses that prevented customers from discussing them to support this point.
Second, the Court rejected defendant’s argument that plaintiff could not rely on the doctrine of fraudulent concealment to extend the four-year limitations period. Fraudulent concealment requires a defendant to act affirmatively to conceal an offense, and the Court explained that defendant had failed to meet its burden to show that there was “no conceivable set of facts, consistent with the complaint’ in which the [exception to the] defense would apply.” The Court pointed to primarily the same evidence relied upon in rejecting defendant’s discovery rule claim to find that “[a]t best” defendant points to facts that might or could have caused plaintiff to inquire but that this merely demonstrates a question for a jury not a basis for dismissal under Rule 12(c). “Simply put, Hillrom does not convincingly argue that any of Linet’s allegations demonstrates that there is ‘no conceivable set of facts’ in which the fraudulent concealment doctrine could apply.”
Finally, the Court also found that defendant’s arguments failed on a separate basis, namely, that plaintiff’s Complaint raised a plausible continuing violation theory that postponed the beginning of the limitations period because of defendant’s infliction of continuing and accumulating harm. Defendant had not challenged plaintiff’s allegation that it had inflicted continuing and accumulating harm each time it entered into new versions of the contracts in question or renewed, extended, or expanded existing ones. Instead, defendant argued that “Linet cannot plausibly assert both a fraudulent concealment theory and a continuing violation theory” because the latter mandates the very fact that forecloses the fraud-based tolling claim: that the contracts in question that were disclosed in or around 2015 provided a sufficient basis for an antitrust suit at that time. However, the Court rejected this argument as a matter of law on the basis that “the viability of a given legal theory is not determined at the pleadings stage; it is learned through discovery” and therefore not for the court to decide which, if any, of the doctrines prevail (stating that “winnowing claims is not an appropriate task at the pleadings stage”).
This case demonstrates the challenges defendants face in having claims dismissed under the statute of limitations theories at the pleadings stage. It is also a reminder about the availability of the often-overlooked Rule 12(c) motion for judgment on the pleadings as a means of disposing a case on the underlying merits before trial.
Antitrust Litigation