Dentsply International, Inc. v. Dental Brands for Less LLC

Background

Dentsply Sirona, Inc. sued Dental Brands for Less LLC, doing business as Dental Wholesale Direct, concerning Dental Brands’ resale of Dentsply’s dental products. Dental Brands filed counterclaims, including a claim under Section 1 of the Sherman Antitrust Act. In 2016, the court dismissed that antitrust counterclaim for failure to allege an antitrust injury necessary for antitrust standing—the legal requirement that a claimant suffer the type of injury the antitrust laws are intended to prevent.

The earlier opinion treated the alleged anticompetitive practice as a horizontal minimum-price-fixing conspiracy involving Dentsply and its authorized distributors. Dental Brands alleged that the conspiracy sought to maintain artificially high prices and eliminate discount dealers. It alleged that Dentsply used misrepresentations and litigation against unauthorized distributors. Dental Brands identified its injuries as lost business caused by those misrepresentations and litigation costs from defending what it called sham litigation.

Motion for Reconsideration

Dental Brands moved under Federal Rule of Civil Procedure 54(b) to reconsider the 2016 dismissal. That rule permits a court to revise a nonfinal order before final judgment, but the court explained that reconsideration is governed by the law-of-the-case doctrine. Under that doctrine, a court generally continues to follow its earlier rulings unless there is a compelling reason, such as a controlling change in the law, new evidence, clear error, or a need to prevent manifest injustice.

Dental Brands argued that the Second Circuit’s 2019 decision in IQ Dental Supply, Inc. changed controlling law. In that decision, the Second Circuit found that a dental-supply company had adequately alleged an antitrust injury from a direct boycott of its own business, while not having standing to challenge boycotts of third parties. The Second Circuit did not decide the price-fixing issue in that appeal and noted that the price-fixing claims had been dismissed because competitors cannot claim injury from supracompetitive prices.

Dental Brands also argued that the 2016 opinion had identified the wrong antitrust violation and injury. It contended that the violation was an overarching conspiracy to exclude Dental Brands and other discount competitors from the market, and that the injury was the resulting distortion of the dental-supply market rather than merely lost business and litigation costs.

Court’s Analysis

The court rejected both arguments. It held that IQ Dental Supply did not change the rule applied in 2016. The court continued to apply the rule that a competitor alleging a minimum-price-fixing scheme cannot establish antitrust injury merely by alleging that it was harmed by conduct associated with the scheme when it was not forced to pay higher prices for a product.

The court also held that the 2016 opinion correctly defined the alleged violation and injury based on the counterclaims as pleaded. The counterclaims repeatedly described a horizontal price-fixing conspiracy among authorized dealers, with Dentsply allegedly acting to eliminate discount dealers in support of that conspiracy. The alleged misrepresentations and litigation were pleaded as acts furthering the price-fixing conspiracy, not as the antitrust violation itself. The court likewise found that the counterclaims identified lost business and litigation costs—not the broader market-distortion theory Dental Brands later advanced—as the injuries.

The court further stated that allowing Dental Brands to introduce a new counterclaim at that stage would be unjust and prejudicial to Dentsply because fact discovery had ended, a merits summary-judgment motion had been briefed and decided, and only damages discovery and related motions remained.

Disposition

The court denied Dental Brands’ Rule 54(b) motion for reconsideration and directed the Clerk of Court to close docket number 404. The opinion did not state that the denial was with or without prejudice.