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

Background

PharmacyChecker.com LLC sued the National Association of Boards of Pharmacy, Alliance for Safe Online Pharmacies, Center for Safe Internet Pharmacies Ltd., and Partnership for Safe Medicines, Inc. It alleged a conspiracy to restrain trade under Section 1 of the Sherman Act and false advertising or promotion by the National Association of Boards of Pharmacy under Section 43(a) of the Lanham Act. The claims against LegitScript LLC had previously been severed and transferred to the U.S. District Court for the District of Oregon.

The court had previously denied the defendants’ motion to dismiss, rejecting their argument that PharmacyChecker.com had not alleged an antitrust injury. The court nevertheless said the defendants could raise the issue at summary judgment if discovery supported a finding that PharmacyChecker.com’s business was completely or almost completely geared toward facilitating illegality. The court then created a first phase of discovery focused on that issue and contemplated that PharmacyChecker.com would disclose its experts before the defendants.

A magistrate judge later amended the case-management order to require the defendants to disclose their experts first. The defendants objected. Discovery orders are nondispositive pretrial matters, so the district court reviewed the order under the standard requiring modification or reversal if it was clearly erroneous or contrary to law. Discovery rulings are entitled to substantial deference under that standard.

Parties’ Positions

The defendants argued that courts generally require the party bearing the burden of proof to disclose experts first. They contended that reversing the disclosure sequence improperly shifted the burden of proving antitrust injury from PharmacyChecker.com to the defendants.

PharmacyChecker.com agreed that it bore the burden of proving antitrust injury and that the party with that burden ordinarily disclosed experts first. It argued, however, that illegality was an affirmative defense, meaning the defendants bore the burden of proving it and therefore should disclose experts first.

Court’s Analysis

The court held that illegality was not an affirmative defense in this dispute. Instead, if an enterprise was completely or almost completely geared toward facilitating illegality, the resulting harm would not be the kind of antitrust injury the antitrust laws were intended to prevent. The court therefore treated proof that the business was legal as part of PharmacyChecker.com’s prima facie antitrust case—the initial showing required to establish the claim.

The court held that PharmacyChecker.com bore the burden of proving that its business was legal and consequently had to disclose its experts first. The court clarified that the defendants would still bear the burden of production as the expected parties seeking summary judgment at the end of Phase One discovery. That clarification concerned the expected summary-judgment proceeding, not a ruling granting or denying summary judgment in this order.

Ruling

The court sustained the defendants’ objection and reversed the magistrate judge’s order to the extent it required the defendants to disclose their experts first. PharmacyChecker.com was required to make its expert disclosures first. All deadlines remained unchanged, and the parties were directed to submit a revised proposed case-management order by February 11, 2022.