PharmacyChecker.com LLC v. National Association of Boards of Pharmacy

Background

The parties submitted competing proposed discovery schedules. Defendants proposed phased discovery. Their proposed first phase would last five months, including expert discovery, and would focus on whether PharmacyChecker’s enterprise was completely or almost completely geared toward facilitating illegality. Defendants proposed having the option to seek summary judgment after that phase on the ground that PharmacyChecker lacked antitrust standing because of that alleged illegality. A second phase would then address PharmacyChecker’s remaining claims and would last 12 months.

PharmacyChecker proposed a standard, non-phased schedule with eight months of fact discovery followed by four months of expert discovery.

Court’s reasoning

The court explained that district courts have broad discretion to manage pretrial discovery and that discovery may be conducted in phases or focused on particular issues. It rejected PharmacyChecker’s argument that phased discovery lacked legal support because PharmacyChecker cited no contrary authority.

The court treated the legality-related issue as a threshold requirement for antitrust standing. It explained that the issue concerned whether PharmacyChecker had alleged the kind of antitrust injury that the antitrust laws were intended to prevent and that resulted from the defendants’ allegedly unlawful conduct.

The court did not prejudge the possible summary-judgment motion, which had not been filed. It noted, however, that the motion was not frivolous. PharmacyChecker alleged that it provided consumers information about safe international pharmacies selling to consumers in the United States, and PharmacyChecker had acknowledged at a preliminary-injunction hearing that the primary reason for providing that information was to facilitate purchases from those pharmacies. The court also noted that such imports might be permitted in limited circumstances but were generally prohibited because of United States labeling requirements.

The court found that the proposed first phase could create substantial efficiencies by avoiding much of the expense of antitrust discovery if defendants prevailed on their possible motion. It also noted that PharmacyChecker brought only a Sherman Act claim against the Alliance for Safe Online Pharmacies, Center for Safe Internet Pharmacies Ltd., and Partnership for Safe Medicines, Inc.; those parties could therefore avoid at least nearly all of their discovery obligations if the motion succeeded.

The court acknowledged that the phased schedule would delay PharmacyChecker’s case and that PharmacyChecker alleged some duplication and waste. It found those concerns outweighed by the possible efficiencies. The court stated that the delay would not cause financial prejudice because PharmacyChecker’s alleged damages involved lost revenue that could be compensated if PharmacyChecker prevailed at trial. The court also stated that any depositions defendants took during Phase 1 would count toward any later as-of-right deposition allocation.

Rulings

The court adopted portions of the defendants’ proposed Phase 1 discovery schedule. It did not approve any requested extensions to the discovery schedule ordered.

The court declined to adopt a Phase 2 discovery schedule, finding that issue premature and stating that it could be revisited after Phase 1. The court also declined to order a briefing schedule for a possible defense motion for summary judgment and related expert-evidence motions. The defendants could request permission to file such a motion by submitting a pre-motion letter consistent with the scheduling order.

Finally, the court declined to order the parties to participate in a settlement conference, although it stated they were free to conduct one if they wished. The order addressed discovery management and related scheduling; it did not decide the possible summary-judgment motion or the ultimate merits of the claims.